Regal Real Estate Investment Trust

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you have sold or transferred all your units in Regal REIT, you should at once hand this Circular, together with the accompanying form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Securities and Futures Commission of Hong Kong, Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Securities Clearing Company Limited take no responsibility for the contents of this Circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.

CIRCULAR TO UNITHOLDERS (1) MAJOR ACQUISITION AND CONNECTED TRANSACTIONS IN RELATION TO THE SHARE PURCHASE AGREEMENT AND THE OPTION AGREEMENT TO ACQUIRE THE NEW HOTELS (2) CONTINUING CONNECTED TRANSACTIONS (3) EXTRAORDINARY GENERAL MEETING AND CLOSURE OF REGISTER OF UNITHOLDERS

REGAL REAL ESTATE INVESTMENT TRUST (a Hong Kong collective investment scheme authorised under section 104 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)) (Stock Code: 1881)

Managed by

Independent Financial Adviser to the Independent Board Committee, the Independent Unitholders and the Trustee

A letter to the Unitholders is set out on pages 21 to 85 of this Circular. A notice convening the EGM of Regal REIT to be held at Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong on Thursday, 18 July 2013 at 11:00 a.m. is set out on pages N-1 to N-3 of this Circular. Whether or not you are able to attend and vote at the EGM in person, please complete and return the accompanying form of proxy to the Unit Registrar of Regal REIT, Computershare Hong Kong Investor Services Limited of 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon as soon as possible in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

29 June 2013 This overview section is qualified in its entirety by, and should be read in conjunction with the full text of this Circular. Words and expressions not defined herein shall have the same meaning as in the main body of this Circular unless otherwise stated. Meanings of defined terms may be found in the “Definitions” section of this Circular. SHEUNG WAN HOTEL AND THE NORTH POINT HOTEL Regal REIT proposes to acquire from P&R (a connected person of Regal REIT) the Sheung Wan Hotel and the North Point Hotel, both of which are currently under development and are expected to be completed (as evidenced by the issuance of an occupation permit) in the fourth quarter of 2013 and the second quarter of 2014 respectively. Both the Sheung Wan Hotel and the North Point Hotel will be branded as “iclub by Regal (富薈酒店)” hotels. iclub by Regal (富薈酒店) • Positioned to be an upscale select-service hotel brand (typically with around 100 to 350 hotel guestrooms), complementing the “Regal” brand’s full service offering. • Predominately located in the world’s gateway cities and close to the financial centres, regional business centres, convention and exhibition venues, shopping and entertainment hubs, or popular tourist spots with sights and attractions, and conveniently accessed by efficient transport infrastructure. • Designed according to international quality hotel standards with contemporary, chic, trendy, stylish and modern décor and design; with plenty of glass to balance indoor lighting and natural daylight, furnished with comfortable furniture and bedding and equipped with tech-savvy facilities such as LCD TV, iPod speaker, free internet and free WiFi, which are customised for international multi-tasking executives and leisure travellers. • Offers discerning tech-savvy business and leisure travellers a relaxed life-style, with built-in express check-in and check-out system for time conscious travellers, selective refreshments and beverages serving at a cozy lounge, and purposeful facilities such as an “iclub Business Center” with intimate, friendly and tasteful ambience. • Targets international business and leisure travellers who seek good value for money lodging and aims to offer a smart, dynamic, efficient, functional, convenient and pleasant travelling experience that meets the needs of contemporary international business travellers. The symbol “i” stands for “international”, “intelligent” and “information technology enabled”.

1 The table below sets out selected information regarding the Sheung Wan Hotel:

Location: Nos. 132-140 Bonham Strand, Sheung Wan, Hong Kong Number of Guestrooms and Suites: 248 guestrooms comprising 223 standard rooms, 18 one-bedroom suites and 7 two-bedroom suites Number of Storeys: 34 storeys Gross Floor Area: Approximately 7,197 sqm Covered Floor Area: Approximately 9,617 sqm Appraised Value as at 25 June 2013: HK$1,580 million

The table below sets out selected information regarding the North Point Hotel:

Location: Nos. 14-20 Merlin Street, North Point, Hong Kong Number of Guestrooms: 338 guestrooms Number of Storeys: 32 storeys Gross Floor Area: Approximately 6,849 sqm Covered Floor Area: Approximately 9,393 sqm Appraised Value as at 25 June 2013: HK$1,650 million

2 Share Purchase Agreement in respect of Sheung Wan Hotel The Trustee entered into the Share Purchase Agreement dated 28 June 2013, pursuant to which P&R agreed to sell to the Trustee (or its nominee) the SW Target Company Shares, representing 100% of the issued share capital of the SW Target Company, and assign to the Trustee (or its nominee) the SW Shareholder Loan. The table below sets out a summary of the selected key terms:

Consideration HK$1,580 million, plus a customary adjustment for the current assets of the SW Target Group as at completion of the SW Transaction capped at HK$1.5 million. Deposit Within two Business Days following the satisfaction of certain conditions, the Trustee shall pay the Deposit of HK$948 million to P&R, with such Deposit accruing interest(1). Please refer to section 3.1 of the Letter to the Unitholders headed “Key Documentation — Share Purchase Agreement” for further details of the Share Purchase Agreement, including the conditions precedent and the representations and warranties. Option Agreement in respect of North Point Hotel The Trustee entered into the Option Agreement dated 28 June 2013, pursuant to which P&R granted a call option to the Trustee (i.e. the North Point Hotel Option), exercisable by the Trustee (acting on the instructions of the Manager) in its sole discretion. Upon exercise of the call option, P&R will sell to the Trustee (or its nominee) the NP Target Company Shares, representing 100% of the issued share capital of the NP Target Company, and assign to the Trustee (or its nominee) the NP Shareholder Loan. The table below sets out a summary of the selected key terms:

Option Fee HK$10 million Refundable Cash Collateral Within two Business Days following the satisfaction of certain conditions, the Trustee shall pay the Refundable Cash Collateral of HK$990 million to P&R, with such Refundable Cash Collateral accruing interest(1). Option Exercise Mechanics The Trustee may conditionally exercise the North Point Hotel Option by delivering an exercise notice to P&R within 30 days after the occupation permit for the North Point Hotel is granted. The exercise notice will become unconditional once all relevant and applicable provisions of the REIT Code and Listing Rules have been complied with. If such conditions are not satisfied within three months of the exercise notice (or such later date as agreed) the North Point Hotel Option will lapse. Option Exercise Price The Initial Exercise Price of HK$1,650 million, subject to an initial adjustment based on an updated valuation of the North Point Hotel as appraised by an independent property valuer as of the last month end date before the grant of the occupation permit for the North Point Hotel, plus a further customary adjustment for the current assets of the NP Target Group as at completion of the NP Transaction capped at HK$1.5 million. Expiry Unless otherwise agreed between P&R and the Trustee, the North Point Hotel Option will expire if: (a) the updated appraised value of the North Point Hotel is greater than HK$2,000 million or lower than HK$1,300 million; (b) the occupation permit for the North Point Hotel is not obtained by 30 September 2014; (c) the exercise notice is not delivered during the option exercise period; or (d) any condition to the exercise of the North Point Hotel Option has not been satisfied by the specified date. Please refer to section 3.2 of the Letter to the Unitholders headed “Key Documentation — Option Agreement” for further details of the Option Agreement, including the conditions precedent and the representations and warranties.

Note:

(1) Pursuant to the Share Purchase Agreement or the Option Agreement (as the case may be), the interest rate of the Deposit or Refundable Cash Collateral (as the case may be) shall be calculated at the higher of the following: (a) 4.25% per annum, which is the interest rate for the notes due 2017 issued by Regal Hotels pursuant to its medium term note programme; and (b) the weighted average effective interest cost (taking into account the interest rate, issue price, placement fees and commissions) of the Notes issued to finance the payment of the Deposit or Refundable Cash Collateral (as the case may be). Currently, the Manager intends to finance the payment of the Deposit or Refundable Cash Collateral (as the case may be) from the proceeds of the March 2013 Notes and the May 2013 Notes, which have a weighted average effective interest cost of 4.3047% per annum. In this case, the Deposit or Refundable Cash Collateral shall accrue interest at 4.3047% per annum.

3 New Lease Agreements, New Lease Guarantees and New Hotel Management Agreements

Concurrently with completion of the SW Transaction and the NP Transaction (as the case may be), Regal REIT (through the SW Property Company and the NP Property Company) will enter into lease agreements with lessee(s) in respect of the entire Sheung Wan Hotel and North Point Hotel (being the New Lease Agreements). The leases will be for a term commencing from the date of the relevant New Lease Agreement and ending on the 31 December immediately following the fifth anniversary of the date of the relevant New Lease Agreements, and may be extended for a further five years at the sole discretion of the SW Property Company or the NP Property Company (as the case may be). The rent payable to the SW Property Company or the NP Property Company (as the case may be) in respect of the first, second and third years of the lease term shall be 5.00%, 5.25% and 5.50% respectively of the SW Hotel Purchase Price or the Final Exercise Price, as applicable. The rent payable in respect of each Lease Year of the remainder of the original lease term and any extension thereof is to be determined based on a market rental review performed by an independent professional property valuer jointly appointed by the Lessee and the SW Property Company or the NP Property Company (as the case may be).

Regal Hotels will, at the same time as entering into the relevant New Lease Agreement, enter into the lease guarantee pursuant to which Regal Hotels will guarantee: (a) the Lessee’s obligations to pay all amounts owing or payable to the relevant Lessor under the relevant New Lease Agreement; and (b) the due observance and performance of the New Lease Agreement on the part of the Lessee.

It is also intended that the New Hotel Management Agreement will be entered into between the SW Property Company or NP Property Company (as the case may be), the Lessee, Regal Hotels and the Hotel Manager concurrently with the signing of the relevant New Lease Agreement.

Please refer to sections 3.5 and 3.6 of the Letter to the Unitholders headed “Key Documentation — New Lease Agreements and New Lease Guarantees” and “Key Documentation — New Hotel Management Agreements” for further details of the New Lease Agreements, New Lease Guarantees and the New Hotel Management Agreements.

Interior fit-out programmes

The construction of the New Hotels will include works to be completed under the Interior Fit-Out Programmes. Such works will primarily be interior finishing and fittings works.

Completion of the acquisition of the Sheung Wan Hotel or North Point Hotel may occur prior to completion of the relevant Interior Fit-Out Programme. However, as the SW Hotel Purchase Price (in respect of the Sheung Wan Hotel) and the Final Exercise Price (in respect of the North Point Hotel) are based on the SW Appraised Value and NP Initial Appraised Value, respectively, which in turn assume completion of the relevant Interior Fit-Out Programme, P&R has undertaken under the Share Purchase Agreement and the Option Agreement to complete the Interior Fit-Out Programmes by the Interior Fit-Out Long Stop Date at its own cost and expense. For further details, please refer to sections 3.1.7, 3.2.10 and 3.4 of the Letter to the Unitholders. REASONS FOR, AND BENEFITS OF, ACQUIRING THE NEW HOTELS

Operating the New Hotels under the “iclub by Regal (富薈酒店)” brand will enhance the brand name of “iclub by Regal (富薈酒店)”.

Regal REIT’s number of guestrooms would increase by 14.9% (from 3,929 guestrooms and suites as at 31 December 2012 to approximately 4,515 guestrooms and suites) and the gross floor area of Regal REIT’s property portfolio would increase by 6.5% (from approximately 216,412 sqm as at 31 December 2012 to approximately 230,458 sqm).

The Option Agreement exercise price adjustment mechanism ensures that the North Point Hotel will be acquired at or below market valuation (as assessed by the Independent Property Valuer).

The New Lease Agreements will enable Regal REIT to mitigate its exposure to initial start-up risk associated with the operation of the New Hotels, and ensure that Regal REIT receives a base level of income during the terms of the New Lease Agreements.

4 FINANCING

It is expected that: (a) the Deposit and the Refundable Cash Collateral will be financed by the proceeds of issuances of the March 2013 Notes and the May 2013 Notes; (b) the Option Fee will be financed by Regal REIT’s internal resources; and (c) the remainder of the SW Hotel Purchase Price (i.e. excluding the Deposit), the Final Exercise Price, the Current Assets Adjustments, as well as the Manager Acquisition Fees, Trustee Additional Fees and Additional Costs for both the SW Transaction and the NP Transaction will be financed by: (i) proceeds of Notes issued pursuant to the Regal REIT MTN Programme; (ii) existing and/or new bank facilities secured against the Sheung Wan Hotel, the North Point Hotel and/or other assets held by Regal REIT; (iii) the Option Fee applied against part of the Final Exercise Price; (iv) the Refundable Cash Collateral refunded to Regal REIT at completion of the NP Transaction; and/or (v) Regal REIT’s internal resources. In the event of any shortfall in the funding required for completion of the SW Transaction or the NP Transaction, Regal REIT may also draw down on the loan facility provided by P&R Finance Limited (a wholly-owned subsidiary of P&R Holdings Limited and a connected person of Regal REIT) of up to an aggregate principal amount of HK$1,457 million to fund the shortfall.

Please refer to section 7 of the Letter to the Unitholders headed “Financial Effects of the SW Transaction and the NP Transaction on Regal REIT” for the pro forma financial effects of completion of the SW Transaction and/or completion of the NP Transaction. The pro forma financial effects presented therein are strictly for illustrative purposes only and were prepared based on the assumptions set out therein. ENLARGED PORTFOLIO

The table below sets out a summary of selected information of the existing portfolio and the enlarged portfolio (based on the specifications in respect of Sheung Wan Hotel and North Point Hotel set out in the Share Purchase Agreement and the Option Agreement):

Description Gross Floor Approx. Covered No. of Valuation Area Floor Area Guestrooms (HK$ million) (sqm) (sqm) and Suites (1) Existing Hotel Properties of 216,412 260,630 3,929 21,0323 Regal REIT1 (2) Sheung Wan Hotel2 7,197 9,617 248 1,5804 (3) North Point Hotel2 6,849 9,393 338 1,6504 Total Enlarged Portfolio 230,458 279,640 4,515 24,262

Notes: (1) The existing hotel properties of Regal REIT are Regal Airport Hotel, Regal Hongkong Hotel, Regal Kowloon Hotel, Regal Oriental Hotel, Regal Riverside Hotel and Wanchai Regal iClub Hotel. (2) With the Manager’s prior written approval, the specifications in respect of Sheung Wan Hotel and North Point Hotel may be subject to change. (3) Valuation as at 31 December 2012. (4) Valuation as at 25 June 2013.

5 RISK FACTORS

This section only provides a brief description of the risk factors in relation to the acquisition of the New Hotels. Unitholders should read and consider carefully the risk factors as more fully described in section 8 of the Letter to the Unitholders headed “Risk Factors” before deciding to vote on the EGM Resolutions.

• The completed New Hotels may be inconsistent with the specifications provided in the Share Purchase Agreement or the Option Agreement

• The due diligence survey on the New Hotels prior to completion of the SW Transaction or the NP Transaction may not have identified all materials defects, breaches of laws and regulations and other deficiencies

• Regal REIT may not be able to enter into New Lease Agreements and New Hotel Management Agreements in the future on similar terms

• Regal REIT is not fully insulated from the risks associated with the hotel industry despite the structure of the New Lease Agreements

• The Manager’s ability to effectively monitor the obligations of the Hotel Manager under the New Hotel Management Agreements in respect of the New Hotels and to actively manage the New Hotels is limited

• The Interior Fit-Out Programmes involve fit-out work and may not be completed on schedule

• The New Hotels have no operating history and there may be an initial start-up risk associated with the New Hotels

• There are risks to leveraging and limitations on Regal REIT’s ability to leverage

• Failure by P&R, the Guarantors and/or other counterparties to fulfill their obligations under the SW Transaction Documents and/or the NP Transaction Documents, such as any failure to refund the Deposit and Refundable Cash Collateral which are not held in escrow, may have a material adverse effect on Regal REIT’s operations

Unitholders and potential investors in the Units should note that the Option Agreement does not oblige the Trustee to exercise the North Point Hotel Option, and therefore the NP Transaction may or may not proceed. Unitholders and potential investors in the Units are advised to exercise caution when dealing in the Units.

6 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION 1(s)

If you are in any doubt as to any aspect of this Circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution licensed to deal in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your units in Regal REIT, you should at once hand this Circular, together with the accompanying form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Securities and Futures Commission of Hong Kong, Hong Kong Exchanges and Clearing Limited, The 1(u) Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.

Managed by

(1) MAJOR ACQUISITION AND CONNECTED TRANSACTIONS IN RELATION TO THE SHARE PURCHASE AGREEMENT AND THE OPTION AGREEMENT TO ACQUIRE THE NEW HOTELS (2) CONTINUING CONNECTED TRANSACTIONS (3) EXTRAORDINARY GENERAL MEETING AND CLOSURE OF REGISTER OF UNITHOLDERS

Independent Financial Adviser to the Independent Board Committee, the Independent Unitholders and the Trustee

A letter to the Unitholders is set out on pages 21 to 85 of this Circular. A notice convening the EGM of Regal REIT to be held at Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong on Thursday, 18 July 2013 at 11:00 a.m. is set out on pages N-1 to N-3 of this Circular. Whether or not you are able to attend and vote at the EGM in person, please complete and return the accompanying form of proxy to the Unit Registrar of Regal REIT, Computershare Hong Kong Investor Services Limited of 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish. 29 June 2013 TABLE OF CONTENTS

Page

CORPORATE INFORMATION ...... 1

DEFINITIONS ...... 3

INDICATIVE TIMETABLE ...... 20

LETTER TO THE UNITHOLDERS ...... 21 1. Introduction ...... 21 2. The SW Transaction and the NP Transaction ...... 23 3. Key Documentation ...... 33 4. Financing of the SW Transaction and the NP Transaction...... 55 5. Fees and Charges in relation to the SW Transaction and the NP Transaction ...... 57 6. Reasons for, and Benefits of, the SW Transaction and the NP Transaction ...... 59 7. Financial Effects of the SW Transaction and the NP Transaction on Regal REIT ...... 60 8. Risk Factors...... 67 9. Continuing Connected Transactions ...... 71 10. Implications of the SW Transaction and the NP Transaction under the REIT Code and the Trust Deed ...... 78 11. Recommendations ...... 82 12. Extraordinary General Meeting and Closure of Register of Unitholders ...... 84 13. Additional Information...... 85

LETTER FROM THE INDEPENDENT BOARD COMMITTEE...... IBC-1

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER ...... IFA-1

Appendix 1 : Financial Information of Regal REIT ...... A1-1

Appendix 2 : Accountants’ Reports in respect of the SW Target Company and the NP Target Company...... A2-1

Appendix 3 : Pro Forma Financial Information of the Enlarged Group ...... A3-1

Appendix 4 : Independent Property Valuer’s Valuation Reports ...... A4-1

Appendix 5 : Market Consultant’s Report ...... A5-1

Appendix 6 : Summary of Government Grants...... A6-1

Appendix 7 : Difference in Terms between the Option Agreement and the MOU . . A7-1

Appendix 8 : General Information...... A8-1

NOTICE OF EXTRAORDINARY GENERAL MEETING...... N-1 CORPORATE INFORMATION

Regal REIT Regal Real Estate Investment Trust, a collective investment scheme constituted as an unit trust and authorised under section 104 of the SFO subject to applicable conditions from time to time, or Regal Real Estate Investment Trust and the companies controlled by it, as the context requires

Manager Regal Portfolio Management Limited Unit No. 1504, 15th Floor 68 Yee Wo Street Causeway Bay Hong Kong

Directors of the Manager

Non-executive Directors Mr. LO Yuk Sui (Chairman) Mr. Donald FAN Tung Mr. Jimmy LO Chun To Miss LO Po Man Mr. Kenneth NG Kwai Kai

Executive Directors Mr. Francis CHIU Mr. Simon LAM Man Lim

Independent Non-executive Mr. John William CRAWFORD, JP Directors Mr. Alvin Leslie LAM Kwing Wai Mr. Kai Ole RINGENSON Hon. Abraham SHEK Lai Him, SBS, JP

Trustee DB Trustees (Hong Kong) Limited Level 52, International Commerce Centre 1 Austin Road West Kowloon Hong Kong

Unit Registrar Computershare Hong Kong Investor Services Limited Shops 1712-1716, 17th Floor Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

Legal Advisers to the Manager Baker & McKenzie 23rd Floor, One Pacific Place 88 Queensway Hong Kong

—1— CORPORATE INFORMATION

Legal Advisers to the Trustee Mayer Brown JSM 16th-19th Floors, Prince’s Building 10 Chater Road Central Hong Kong

Reporting Accountants Ernst & Young 22nd Floor, CITIC Tower 1 Tim Mei Avenue, Central Hong Kong

Independent Financial Adviser Somerley Limited to the Independent Board 20th Floor, Aon China Building Committee, the Independent 29 Queen’s Road Central Unitholders and the Trustee Hong Kong

Independent Property Valuer Savills Valuation and Professional Services Limited 23/F Two Exchange Square Central, Hong Kong

Market Consultant Colliers International (Hong Kong) Limited 5701 Central Plaza 18 Harbour Road Wanchai, Hong Kong

—2— DEFINITIONS

In this Circular, the following definitions apply throughout unless otherwise stated. Also, where terms are defined and used in only one section of this document, these defined terms are not included in the table below:

Accountants’ Reports the Accountants’ Reports in respect of the SW Target Company and the NP Target Company as set out in Appendix 2 to this Circular.

Additional SW Hotel CCTs has the meaning ascribed to this term in section 9.2 of the Letter to the Unitholders headed “Continuing Connected Transactions — New CCT Waiver Application”.

Additional NP Hotel CCTs has the meaning ascribed to this term in section 9.2 of the Letter to the Unitholders headed “Continuing Connected Transactions — New CCT Waiver Application”.

Additional Continuing has the meaning ascribed to this term in section 9.2 of the Connected Transactions Letter to the Unitholders headed “Continuing Connected Transactions — New CCT Waiver Application”.

Additional Costs has the meaning ascribed to this term in section 5.1 of the Letter to the Unitholders headed “Fees and Charges in relation to the SW Transaction and the NP Transaction — Fees Payable to the Manager and the Trustee and the Additional Costs in relation to the SW Transaction and the NP Transaction”.

Adjusted GOP the aggregate of the Gross Operating Profit and the Net Rental Income.

Associated company shall bear the meaning as defined in the REIT Code.

Associate(s) shall bear the meaning as defined in the REIT Code.

Audited Report in relation to the New Hotel Management Agreements, means the report of the Auditors on their audit of the books and records of the relevant New Hotel and their audit of the financial information under the “Actual Year to Date” column of the Profit and Loss Statements for the relevant Fiscal Year prepared in accordance with the generally accepted accounting principles adopted in Hong Kong and such professional standards deemed appropriate by the Auditors for this purpose, and by reference to the terms of the relevant New Hotel Management Agreement.

—3— DEFINITIONS

Auditors in relation to the New Hotel Management Agreements, means an internationally recognised accounting firm experienced in hotel audits as may be mutually agreed between by the Owner and the Hotel Manager and engaged by the Owner to audit the books and accounting records of the relevant New Hotel for any Fiscal Year, and to review the financial statement of the operation of the relevant New Hotel prepared and submitted by the Hotel Manager for each Fiscal Year pursuant to the relevant New Hotel Management Agreement.

Base Rent a fixed amount of monthly rent payable.

Board the board of Directors.

Business Day a day (excluding, Saturdays, Sundays and public holidays) on which commercial banks are open for business in Hong Kong and the Stock Exchange is open for trading.

Century City Century City International Holdings Limited (Stock code: 355), a company incorporated in Bermuda with limited liability, ordinary shares of which are listed on the Stock Exchange. connected person has the meaning ascribed to it in the REIT Code.

Current Assets Adjustment in relation to the consideration payable by the Trustee in respect of each of the SW Transaction and the NP Transaction, the customary adjustment on a dollar-for-dollar basis for the current assets (such as all receivables, refundable utility and other deposits placed with relevant authorities or suppliers and all cash and deposits at bank), of the SW Target Group as at completion of the SW Transaction and the NP Target Group as at completion of the NP Transaction respectively, provided that each current assets adjustment will be capped at HK$1.5 million; and collectively the “Current Assets Adjustments”.

Deed(s) of Tax Indemnity has the meaning ascribed to it in section 3.3 of the Letter to the Unitholders headed “Key Documentation — Deeds of Tax Indemnity”.

Deposit a deposit of HK$948 million (representing 60% of the SW Hotel Purchase Price), which is refundable in limited circumstances, and payable by the Trustee to P&R under the Share Purchase Agreement within two Business Days following the satisfaction of the conditions described in paragraphs (a) and (b) of section 3.1.4 of the Letter to the Unitholders headed “Key Documentation — Share Purchase Agreement — Conditions Precedent”.

—4— DEFINITIONS

Deposited Property all the assets of Regal REIT.

Directors the directors of the Manager.

EGM the extraordinary general meeting of Unitholders convened by and referred to in the EGM Notice.

EGM Notice the notice included in this Circular in respect of the EGM to consider and, if thought fit, approve the EGM Resolutions.

EGM Record Date 18 July 2013, being the date by reference to which eligibility of the Unitholders to vote at the EGM will be determined.

EGM Resolutions the Ordinary Resolutions to be passed at the EGM, as set out in the EGM Notice and explained in this Circular.

Enlarged Group Regal REIT, the SW Target Group and the NP Target Group.

Excess the amount by which the Net Property Income for a Lease Year exceeds the Base Rent for the same Lease Year.

Facility Letter the facility letter entered into by the Trustee (as borrower) and P&R Finance Limited (as lender) in respect of the Vendor Facility, as described in section 4.5 of the Letter to the Unitholders headed “Financing of the SW Transaction and the NP Transaction — Vendor Facility”.

FF&E all investments in the replacement of furniture, fixtures and equipment at the relevant New Hotel which are required to maintain the relevant New Hotel at the operating standards and at the operating capacity of the relevant New Hotel, and for the purpose of this definition:

(a) “furniture” includes all loose furniture, furnishings, decorations and appliances in restaurants, bars, hotel rooms, offices, kitchens and workshops throughout the relevant New Hotel;

(b) “fixtures” includes all fixed furniture such as stationary bar counters and reception desks, fixed carpets, marble and hardwood floors, wall coverings and walk-in freezers and fridges;

(c) “equipment” includes kitchen equipment, ranges, workshop machinery, cleaning equipment, telecommunications equipment, computer equipment and vehicles;

—5— DEFINITIONS

but the term “FF&E” shall exclude (i) items which are included as part of the fixtures of the building in which the relevant New Hotel is located; (ii) Operating Equipment except for those Operating Equipment owned by the Lessor on the day on which the relevant New Hotel Management Agreement becomes effective and any additional Operating Equipment capitalized under the circumstances of a Capital Addition as defined in section 3.6.8 of the Letter to the Unitholders headed “Key Documentation — New Hotel Management Agreements — Capital Additions”; and (iii) investments in fitting out, fixtures and furniture in relation to the relevant Interior Fit-Out Programme.

FF&E Expenditure has the meaning ascribed to this term in section 3.6.7 of the Letter to the Unitholders headed “Key Documentation — New Hotel Management Agreements — Furniture, Fixtures and Equipment Reserve & Expenditure”.

FF&E Reserve an interest bearing account established for funds to be held on reserve for FF&E in the name of the Lessor at a bank designated by the Hotel Manager and approved by the Lessor.

Final Exercise Price has the meaning ascribed to this term in section 3.2.5 of the Letter to the Unitholders headed “Key Documentation — Option Agreement — Option Exercise Price”.

Fiscal Year in relation to the New Hotel Management Agreements, means 1 January in one year to 31 December of the same year, and the first Fiscal Year shall commence on the day on which the relevant New Hotel Management Agreement becomes effective and end on 31 December of the same year and the last Fiscal Year shall end on the date of the expiration of the relevant New Hotel Management Agreement.

Fixed Charges expenses which constitute a non-operating expense in nature in accordance with the Uniform System including but not limited to government rent and rates, property tax and other similar taxes, government charges in respect of the relevant New Hotel and other sundry fixed charges.

—6— DEFINITIONS

Gearing Ratio the aggregate borrowings of Regal REIT (as calculated under the Trust Deed) as a percentage of the total gross asset value of the Deposited Property as set out in Regal REIT’s latest published audited accounts immediately prior to such borrowing being effected (as adjusted by (a) the amount of any proposed distribution declared by the Manager since the publication of such accounts; and (b) where appropriate the latest published valuation of the assets of Regal REIT if such valuation is published after the publication of such accounts).

Government the government of Hong Kong.

Government Grants in respect of each New Hotel, the Government Lease(s) under which the land on which such New Hotel is located is held from the Government by the NP Property Company or the SW Property Company, as the case may be.

Gross Operating Profit the Total Hotel Revenue less the Hotel Operating Expenses during the same period.

Gross Revenues all revenue derived from the relevant New Hotel, including the Total Hotel Revenue and all subsidy payments, governmental allowances and awards, and any other form of incentive payments or awards which are attributable to the operation of the relevant New Hotel, but excluding (a) hotel accommodation tax or other similar government charges; (b) income derived from securities and other property investments; (c) receipts from expropriation awards or sales under the threat of expropriation; (d) proceeds of any insurance other than business interruption; (e) rebates, discounts or credits of a similar nature; (f) gratuities paid to hotel employees; (g) payments received at the relevant New Hotel for accommodation, goods or services to be provided at other hotels.

Guarantors Paliburg and Regal Hotels.

HK$ or Hong Kong dollars Hong Kong dollars, the lawful currency of Hong Kong.

HIBOR the rate of interest offered on Hong Kong dollar loans by banks in the Hong Kong interbank market for a specified period ranging from overnight to one year.

Hong Kong the Hong Kong Special Administrative Region of the People’s Republic of China.

—7— DEFINITIONS

Hotel Manager Regal Hotels International Limited, a company incorporated 2(g) in Hong Kong, which is also the hotel manager of the Initial Hotel Properties and Wanchai Regal iClub Hotel. It is a wholly-owned subsidiary of Regal Hotels.

Hotel Operating Expenses the expenses which constitute an operating expense in nature in accordance with the Uniform System, including but not limited to: (a) cost of sales; (b) payroll and related expenses by hotel rooms, food and beverage, administrative and general, sales and marketing, and repair and maintenance departments; (c) expenses for Operating Equipment; (d) other departmental expenses; (e) administrative and general expenses; (f) sales and marketing expense; (g) repair and maintenance expenses; (h) energy and utility expenses; and (i) premiums of business interruption insurance, third party liability insurance and other insurances against items like theft or damage to hotel guests’ properties.

Independent Board Committee the independent board committee of the Board (comprising Mr. John William CRAWFORD, JP, Mr. Kai Ole RINGENSON and Mr. Alvin Leslie LAM Kwing Wai, all of whom are Independent Non-executive Directors who have no direct or indirect interest in the SW Transaction or the NP Transaction) which has been established to advise the Independent Unitholders on the Transaction Matters Requiring Approval.

Independent Financial Adviser Somerley Limited.

Independent Non-executive the independent non-executive directors of the Manager as at Directors the date of this Circular.

Independent Property Valuation the Independent Property Valuer’s valuation reports in respect Reports of the New Hotels included in Appendix 4 to this Circular.

Independent Property Valuer Savills Valuation and Professional Services Limited.

Independent Unitholder(s) Unitholder(s) other than those who have a material interest in the EGM Resolutions.

Initial Exercise Price has the meaning ascribed to this term in section 3.2.5 of the Letter to the Unitholders headed “Key Documentation — Option Agreement — Option Exercise Price”.

Initial Hotel Properties the Regal Airport Hotel, Regal Hongkong Hotel, Regal Kowloon Hotel, Regal Oriental Hotel and Regal Riverside Hotel and “Initial Hotel Property” means any one of them.

—8— DEFINITIONS

Interior Fit-Out Agent P&R Contracting Agency Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of P&R, to be appointed by the SW Property Company or the NP Property Company to manage and settle Interior Fit-Out Contracts on its behalf under the relevant Interior Fit-Out Programme.

Interior Fit-Out Agency Deed(s) has the meaning ascribed to it in section 3.4 of the Letter to the Unitholders headed “Key Documentation — Interior Fit-Out Agency Deeds”.

Interior Fit-Out Contracts all construction contracts and/or other contracts in relation to the carrying out of the relevant Interior Fit-Out Programme to be entered into by the SW Property Company or the NP Property Company, and to be managed and settled by the Interior Fit-Out Agent on behalf of the SW Property Company or the NP Property Company, with the relevant contractors and/or project consultants and/or other professional advisers whose services are from time to time engaged in connection with the execution of the relevant Interior Fit-Out Programme.

Interior Fit-Out Long Stop Date the date falling six months after the completion of the SW Transaction or (as the case may be) the NP Transaction.

Interior Fit-Out Programmes collectively, the SW Interior Fit-Out Programme and the NP Interior Fit-Out Programme, and each an “Interior Fit-Out Programme”.

IPO Circular the offering circular dated 19 March 2007 issued by the Manager in connection with the listing of the Units on the Stock Exchange by way of global offering.

Latest Practicable Date 25 June 2013, being the latest practicable date of ascertaining certain information contained in this Circular prior to its publication.

Lease Year (a) each of the first three years of a New Lease Agreement, commencing from the date that the New Lease Agreement is executed;

(b) the period commencing immediately following the end of the third year of a New Lease Agreement and ending on 31 December of the same year (if such period commenced before 30 June) or 31 December of the following year (if such period commenced after 30 June); and

—9— DEFINITIONS

Lessee Favour Link International Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of Regal Hotels.

Lessor in respect of the New Lease Agreement for the Sheung Wan Hotel, the SW Property Company, and in respect of the New Lease Agreement for the North Point Hotel, the NP Property Company.

Listing Date 30 March 2007, being the date on which the Units were first listed and from which dealings of the Units were permitted to take place on the Stock Exchange.

Listing Rules the Rules Governing the Listing of Securities on the Stock Exchange.

Long Stop Date in respect of the Share Purchase Agreement or, as the case may be, the Option Agreement, 31 March 2014 and 30 September 2014 respectively, or such later date as may be agreed between P&R and the Trustee (acting on the recommendation and at the direction of the Manager).

Manager Regal Portfolio Management Limited (in its capacity as the manager of Regal REIT), a company incorporated under the laws of Hong Kong and a wholly-owned subsidiary of Regal Hotels.

Manager Acquisition Fee has the meaning ascribed to this term in section 5.1 of the Letter to the Unitholders headed “Fees and Charges in relation to the SW Transaction and the NP Transaction — Fees Payable to the Manager and the Trustee and the Additional Costs in relation to the SW Transaction and the NP Transaction”.

Manager Group has the meaning ascribed to this term in section 9.1 of the Letter to the Unitholders headed “Continuing Connected Transactions — Connected Persons of Regal REIT — Manager Group”.

March 2013 Notes has the meaning ascribed to this term in section 4.3 of the Letter to the Unitholders headed “Financing of the SW Transaction and the NP Transaction — Regal REIT MTN Programme”.

Market Consultant Colliers International (Hong Kong) Limited.

—10— DEFINITIONS

Market Consultant’s Report the letter from the Market Consultant, as set out in Appendix 5 to this Circular.

Maximum Adjusted Final HK$1,826.5 million, being the Maximum Final Exercise Price Exercise Price plus the maximum positive Current Assets Adjustment to the Final Exercise Price pursuant to the Option Agreement.

Maximum Adjusted SW Hotel HK$1,581.5 million, being the SW Hotel Purchase Price plus Purchase Price the maximum positive Current Assets Adjustment to the SW Hotel Purchase Price pursuant to the Share Purchase Agreement.

Maximum Final Exercise Price HK$1,825 million, being the Final Exercise Price payable based on the Maximum NP Updated Appraised Value.

Maximum NP Updated HK$2,000 million, being the highest NP Updated Appraised Appraised Value Value that will not cause the North Point Hotel Option to expire (unless otherwise mutually agreed by the parties to the Option Agreement).

Maximum Total Consideration the aggregate of the Maximum Adjusted SW Hotel Purchase Price and the Maximum Adjusted Final Exercise Price.

May 2013 Notes has the meaning ascribed to this term in section 4.3 of the Letter to the Unitholders headed “Financing of the SW Transaction and the NP Transaction — Regal REIT MTN Programme”.

Minimum NP Updated HK$1,300 million, being the lowest NP Updated Appraised Appraised Value Value that will not cause the North Point Hotel Option to expire (unless otherwise mutually agreed by the parties to the Option Agreement).

MOU has the meaning ascribed to this term in section 2.1 of the Letter to the Unitholders headed “The SW Transaction and the NP Transaction — Overview”.

MOU Announcements has the meaning ascribed to this term in section 2.1 of the Letter to the Unitholders headed “The SW Transaction and the NP Transaction — Overview”.

MTN Issuer has the meaning ascribed to this term in section 4.3 of the Letter to the Unitholders headed “Financing of the SW Transaction and the NP Transaction — Regal REIT MTN Programme”.

MTR Mass Transit Railway.

NAV net asset value.

—11— DEFINITIONS

Net Property Income the amount equal to Adjusted GOP less: (a) the hotel management fee payable under the relevant New Hotel Management Agreement; and (b) the Fixed Charges.

Net Rental Income the aggregate of: (a) income received from concessions and other persons (not related to operation of the relevant New Hotel) occupying space of the relevant New Hotel; and (b) licence fee income (including income generated from mobile phone integrated radio system antennae space rental at the relevant New Hotel).

New CCT Waiver Application has the meaning ascribed to this term in section 9.2 of the Letter to the Unitholders headed “Continuing Connected Transactions — New CCT Waiver Application”.

New Hotel Management has the meaning ascribed to this term in section 3.6.1 of the Agreement(s) Letter to the Unitholders headed “Key Documentation — New Hotel Management Agreements — General”.

New Hotels the Sheung Wan Hotel and the North Point Hotel, and “New Hotel” means any one of them.

New Lease Agreement(s) has the meaning ascribed to this term in section 3.5.1 of the Letter to the Unitholders headed “Key Documentation — New Lease Agreements and New Lease Guarantees — General”.

New Lease Guarantee(s) has the meaning ascribed to this term in section 3.5.6 of the Letter to the Unitholders headed “Key Documentation — New Lease Agreements and New Lease Guarantees — Lease Guarantees”.

North Point Hotel has the meaning ascribed to this term in section 2.2.2.1 of the Letter to the Unitholders headed “The SW Transaction and the NP Transaction — Information on the New Hotels — North Point Hotel — Description”.

North Point Hotel Option has the meaning ascribed to this term in section 2.1 of the Letter to the Unitholders headed “The SW Transaction and the NP Transaction — Overview”.

Notes the notes issued or to be issued by the MTN Issuer from time to time pursuant to the Regal REIT MTN Programme.

NP Interior Fit-Out Programme the interior fit-out programme in relation to the North Point Hotel as more fully described under section 2.2.2.7 headed “The SW Transaction and the NP Transaction — Information on the New Hotels — North Point Hotel — NP Interior Fit-Out Programme”.

—12— DEFINITIONS

NP Initial Appraised Value the value of the North Point Hotel as at 25 June 2013, as appraised by the Independent Property Valuer on an as-completed basis, being HK$1,650 million.

NP Nominee a special purpose vehicle of Regal REIT, to be incorporated in the British Virgin Islands, being the entity that will directly hold the NP Target Company.

NP Property Company Wise Decade Investments Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the NP Target Company.

NP Shareholder Loan all amounts due (including principal, interests and other sums (if any)), owing or payable by the NP Target Company to P&R in respect of the loan advanced by P&R to NP Target Company and outstanding as at the date of completion of the NP Transaction.

NP Specifications Summary the plans and specifications in respect of the North Point Hotel as set out in the Option Agreement and may be amended by mutual agreement of the parties thereto, the key items of which are summarised in section 2.2.2.1 of the Letter to the Unitholders headed “The SW Transaction and the NP Transaction — Information on the New Hotels — North Point Hotel — Description”.

NP Target Company Fortune Mine Limited, a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of P&R.

NP Target Company Shares 100% of the issued share capital of the NP Target Company to be acquired by the Trustee (or its nominee) upon exercise of the North Point Hotel Option under the Option Agreement.

NP Target Group the NP Target Company and the NP Property Company.

NP Transaction (a) the acquisition by the Trustee (acting on the instructions of the Manager) (or its nominee) of the NP Target Company Shares; and (b) the assignment of the NP Shareholder Loan to the Trustee (or its nominee), on the terms and subject to the conditions of the Option Agreement, upon exercise of the North Point Hotel Option.

NP Transaction Documents collectively, the Option Agreement, the loan assignment, the Deed of Tax Indemnity, the Interior Fit-Out Agency Deed, the New Lease Agreement, the New Lease Guarantee and the New Hotel Management Agreement in respect of the North Point Hotel to be entered into at completion of the NP Transaction.

—13— DEFINITIONS

NP Updated Appraised Value has the meaning ascribed to this term in section 3.2.5 of the Letter to the Unitholders headed “Key Documentation — Option Agreement — Option Exercise Price”.

Operating Equipment supply items which may be consumed in the operation of a hotel including chinaware, glassware, linens, towels, silverware, tools, kitchen utensils, miscellaneous serving equipment, uniforms, engineering and housekeeping tools and utensils, and similar items, as more fully described in the relevant New Hotel Management Agreement.

Option Agreement the option agreement entered into between P&R, the Trustee, Paliburg, Regal Hotels and the Manager dated 28 June 2013 in respect of the grant of the North Point Hotel Option.

Option Fee has the meaning ascribed to this term in section 3.2.3 of the Letter to the Unitholders headed “Key Documentation — Option Agreement — Option Fee”.

Ordinary Resolution a resolution passed at a meeting of Unitholders duly convened and held in accordance with the provisions contained in the Trust Deed and carried by a simple majority of the votes of those Unitholders present and entitled to vote in person or by proxy.

Owner has the meaning ascribed to this term in section 3.6.1 of the Letter to the Unitholders headed “Key Documentation — New Hotel Management Agreements — General”.

P&R P&R Holdings Limited, a joint venture company incorporated in the British Virgin Islands with limited liability, held as to 50% by a wholly-owned subsidiary of Paliburg and as to 50% by a wholly-owned subsidiary of Regal Hotels.

Paliburg Paliburg Holdings Limited (Stock code: 617), a company incorporated in Bermuda with limited liability, ordinary shares of which are listed on the Stock Exchange.

Performance Test the requirement for the Hotel Manager to achieve at least 80% of the approved Gross Operating Profit in respect of the operations of the relevant New Hotel.

Profit and Loss Statement the profit and loss statement on the operation of the relevant New Hotel for the relevant calendar month and the Fiscal Year to date prepared and delivered by the Hotel Manager to the Lessee pursuant to the terms of the relevant New Hotel Management Agreement.

—14— DEFINITIONS

Refundable Cash Collateral a refundable sum of HK$990 million (representing 60% of the Initial Exercise Price) payable by the Trustee to P&R under the Option Agreement within two Business Days following the satisfaction of the conditions described in section 3.2.2 of the Letter to the Unitholders headed “Key Documentation — Option Agreement — Conditions Precedent to Grant of the North Point Hotel Option”.

Regal Airport Hotel the property sub-leased by Bauhinia Hotels Limited from the Airport Authority Hong Kong on which Regal Airport Hotel is situated.

Regal Connected Persons Group has the meaning ascribed to this term in section 9.1 in the Letter to the Unitholders headed “Continuing Connected Transactions — Connected Persons of Regal REIT — Regal Connected Persons Group”.

Regal Hongkong Hotel the property owned by Cityability Limited on which Regal Hongkong Hotel is situated.

Regal Hotels Regal Hotels International Holdings Limited (Stock code: 78), a company incorporated in Bermuda with limited liability, ordinary shares of which listed on the Stock Exchange.

Regal Hotels Group Regal Hotels and its subsidiaries.

Regal Kowloon Hotel the property owned by Ricobem Limited on which Regal Kowloon Hotel is situated.

Regal Oriental Hotel the property owned by Gala Hotels Limited on which Regal Oriental Hotel is situated.

Regal REIT Regal Real Estate Investment Trust, a collective investment scheme constituted as a unit trust and authorised under section 104 of the SFO subject to applicable conditions from time to time, the units of which are listed on the Stock Exchange.

Regal REIT Group Regal REIT and its subsidiaries.

Regal REIT MTN Programme the U.S.$1 billion medium term note programme established by the MTN Issuer on 11 January 2013.

Regal Riverside Hotel the property owned by Regal Riverside Hotel Limited on which Regal Riverside Hotel is situated.

REIT Code the Code on Real Estate Investment Trusts published by the SFC (as amended from time to time).

—15— DEFINITIONS

SFC the Securities and Futures Commission of Hong Kong.

SFO the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as amended, supplemented or otherwise modified and the rules thereunder.

Share Purchase Agreement the sale and purchase agreement entered into between P&R, the Trustee, Paliburg, Regal Hotels and the Manager dated 28 June 2013 in respect of the sale and purchase of the SW Target Company Shares and assignment of the SW Shareholder Loan.

Sheung Wan Hotel has the meaning ascribed to this term in section 2.2.1.1 of the Letter to the Unitholders headed “The SW Transaction and the NP Transaction — Information on the New Hotels — Sheung Wan Hotel — Description”.

Significant Holder has the meaning ascribed to this term in the REIT Code. sqm square metre.

Stock Exchange The Stock Exchange of Hong Kong Limited.

SW Appraised Value the value of the Sheung Wan Hotel as at 25 June 2013, as appraised by the Independent Property Valuer on an as-completed basis, being HK$1,580 million.

SW Interior Fit-Out the interior fit-out programme in relation to the Sheung Wan Programme Hotel as more fully described under section 2.2.1.7 headed “The SW Transaction and the NP Transaction — Information on the New Hotels — Sheung Wan Hotel — SW Interior Fit-Out Programme”.

SW Hotel Purchase Price has the meaning ascribed to this term in section 3.1.2 of the Letter to Unitholders headed “Key Documentation — Share Purchase Agreement — Consideration”.

SW Nominee a special purpose vehicle of Regal REIT, to be incorporated in the British Virgin Islands, being the entity that will directly hold the SW Target Company.

SW Property Company Tristan Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the SW Target Company.

SW Shareholder Loan all amounts due (including principal, interests and other sums (if any)), owing or payable by SW Target Company to P&R in respect of the loan advanced by P&R to SW Target Company and outstanding as at the date of completion of the SW Transaction.

—16— DEFINITIONS

SW Specifications Summary the plans and specifications in respect of the Sheung Wan Hotel as set out in the Share Purchase Agreement and may be amended by mutual agreement of the parties thereto, the key items of which are summarised in section 2.2.1.1 of the Letter to the Unitholders headed “The SW Transaction and the NP Transaction — Information on the New Hotels — Sheung Wan Hotel — Description”.

SW Target Company Plentiful Investments Limited, a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of P&R.

SW Target Company Shares 100% of the issued share capital of the SW Target Company to be acquired by the Trustee (or its nominee) on the terms of and subject to the conditions of the Share Purchase Agreement.

SW Target Group SW Target Company and the SW Property Company.

SW Transaction (a) the acquisition by the Trustee (acting on the instructions of the Manager) (or its nominee) of the SW Target Company Shares; and (b) the assignment of the SW Shareholder Loan to the Trustee (or its nominee), on the terms and subject to the conditions of the Share Purchase Agreement.

SW Transaction Documents collectively, the Share Purchase Agreement, the loan assignment, the Deed of Tax Indemnity, the Interior Fit-Out Agency Deed, the New Lease Agreement, the New Lease Guarantee and the New Hotel Management Agreement in respect of the Sheung Wan Hotel to be entered into at completion of the SW Transaction.

Total Hotel Revenue revenue derived from (a) the relevant New Hotel in relation to (i) all hotel rooms and suites rented for any period; (ii) food and beverage sales; (iii) catering operations conducted outside of the relevant New Hotel; (iv) miscellaneous banquet and meeting room income; (v) rental of audio/video equipment, use of telephone, internet and other telecommunication devices in the relevant New Hotel; (vi) laundry and dry cleaning services rendered; (b) other miscellaneous operated departments in the relevant New Hotel; and (c) service charge levied by the relevant New Hotel on all hotel room revenue and food and beverage revenue (excluding in-hotel-room mini-bar revenue), as more fully described in the relevant New Hotel Management Agreement.

—17— DEFINITIONS

Transaction Matters Requiring the matters which require the approval of the Independent Approval Unitholders at the EGM, as specified in the EGM Notice.

Trust Deed the trust deed constituting Regal REIT dated 11 December 2006, entered into between the Trustee and the Manager, as supplemented by a first supplemental deed dated 2 March 2007, a second supplemental deed dated 15 May 2008, a third supplemental deed dated 8 May 2009, a fourth supplemental deed dated 23 July 2010, a fifth supplemental deed dated 3 May 2011 and a sixth supplemental deed dated 21 July 2011 all entered into between the same parties (as may be further amended and supplemented from time to time).

Trustee DB Trustees (Hong Kong) Limited, in its capacity as trustee of Regal REIT.

Trustee Additional Fee has the meaning ascribed to this term in section 5.1 of the Letter to the Unitholders headed “Fees and Charges in relation to the SW Transaction and the NP Transaction — Fees payable to the Manager and the Trustee and the Additional Costs in relation to the SW Transaction and the NP Transaction”.

U.S.$ the lawful currency of the United States of America.

Uniform System the Tenth Revised Edition of the Uniform System of Accounts for the Lodging Industry published by the American Hotel & Lodging Association, 2113 N. High Street, Lansing, Michigan 48906, or such later edition adopted by the Hotel Manager for implementation by the relevant New Hotel from time to time.

Unitholders holders of the Units from time to time.

Units units of Regal REIT.

Variable Rent means a percentage of the Excess (if any) to be paid as variable rent.

Vendor Facility the loan facility described in section 4.5 of the Letter to the Unitholders headed “Financing of the SW Transaction and the NP Transaction — Vendor Facility”.

Wanchai Regal iClub Hotel a contemporary, select service hotel with 99 guestrooms and suites situated at 211 Johnston Road, Wanchai owned by Regal REIT through Sonnix Limited.

—18— DEFINITIONS

Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations.

Any reference in this Circular to any enactment is a reference to that enactment for the time being amended or re-enacted.

Any reference to a time of day in this Circular shall be a reference to Hong Kong time unless otherwise stated.

Any discrepancies in the tables, graphs and charts between the listed amounts and totals thereof are due to rounding. Where applicable, figures and percentages are rounded to one decimal place.

—19— INDICATIVE TIMETABLE

Event Date and Time

Latest date and time for lodging 15 July 2013 at 4:30 p.m. transfers of Units to qualify for voting at the EGM

Book closure period (both days 16 July 2013 to 18 July 2013 inclusive) to determine the eligibility of Unitholders to vote at the EGM

Latest date and time for lodging 16 July 2013 at 11:00 a.m.1 proxy forms for the EGM

EGM Record Date 18 July 2013

Date and time of the EGM 18 July 2013 at 11:00 a.m.

If the approvals sought at the EGM are obtained:

Payment of the Deposit, Option 22 July 2013 Fee and Refundable Cash Collateral

Estimated date for grant of In the fourth quarter of 2013 occupation permit for the Sheung Wan Hotel

Target date for completion of the In the fourth quarter of 2013 SW Transaction

Estimated date for grant of In the second quarter of 2014 occupation permit for the North Point Hotel

If the North Point Hotel Option In the third quarter of 2014 is exercised - Target date for completion of the NP Transaction

Further announcement(s) will be made by the Manager in relation to those events which are scheduled to take place after the EGM as and when appropriate in accordance with applicable regulatory requirements.

1 Proxy forms have to be lodged not less than 48 hours before the time set for the EGM.

—20— LETTER TO THE UNITHOLDERS

REGAL REAL ESTATE INVESTMENT TRUST (a Hong Kong collective investment scheme authorised under section 104 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong))

(Stock Code: 1881)

Managed by

Directors of the Manager: Registered Office:

Non-executive Directors Unit No. 1504 Mr. LO Yuk Sui (Chairman) 15th Floor Mr. Donald FAN Tung 68 Yee Wo Street Mr. Jimmy LO Chun To Causeway Bay Miss LO Po Man Hong Kong Mr. Kenneth NG Kwai Kai

Executive Directors Mr. Francis CHIU Mr. Simon LAM Man Lim

Independent Non-executive Directors Mr. John William CRAWFORD, JP Mr. Alvin Leslie LAM Kwing Wai Mr. Kai Ole RINGENSON Hon. Abraham SHEK Lai Him, SBS, JP

29 June 2013 To: Unitholders of Regal REIT Dear Sir/Madam,

1. INTRODUCTION

The purposes of this Circular are: (1) to provide you with further information of, among others, the Transaction Matters Requiring Approval and the Additional Continuing Connected

—21— LETTER TO THE UNITHOLDERS

Transactions; (2) to set out the recommendation of the Independent Board Committee to the Independent Unitholders on the Transaction Matters Requiring Approval as to whether they are fair and reasonable; (3) to set out the recommendation of the Independent Financial Adviser to the Independent Board Committee, the Independent Unitholders and the Trustee in relation to the Transaction Matters Requiring Approval; and (4) to serve notice of the EGM.

The EGM Resolutions seek Independent Unitholders’ approval for:

(a) the consummation by Regal REIT of the transactions contemplated under the Share Purchase Agreement and other transactions contemplated under, associated with and/or related to the SW Transaction, including but not limited to the execution of and consummation of the transactions under the Deed of Tax Indemnity and the Interior Fit-Out Agency Deed in respect of the Sheung Wan Hotel;

(b) the consummation by Regal REIT of the transactions contemplated under the Option Agreement and other transactions contemplated under, associated with and/or related to the NP Transaction, including but not limited to the exercise of the North Point Hotel Option, as well as the execution of and consummation of the transactions under the Deed of Tax Indemnity and the Interior Fit-Out Agency Deed in respect of the North Point Hotel;

(c) the consummation by Regal REIT of the transactions contemplated under the Facility Letter and other transactions contemplated under, associated with and/or related to the Vendor Facility; and

(d) the New CCT Waiver Application.

—22— LETTER TO THE UNITHOLDERS

2. THE SW TRANSACTION AND THE NP TRANSACTION

2.1 Overview 1(a), note to 2(s)

Reference is made to the announcements issued by the Manager dated 11 January 2013, 28 February 2013 and 30 April 2013 (collectively, the “MOU Announcements”). The MOU Announcements set out the key terms of a non-binding memorandum of understanding (the “MOU”) in connection with:

(1) the proposed grant of a call option by P&R to the Trustee, entitling Regal REIT (or its trustee or nominee) to, in its sole discretion, acquire 100% of the issued share capital of and shareholder loans to the SW Target Company that, indirectly through its wholly-owned subsidiary, will own the Sheung Wan Hotel upon completion of its development; and

(2) the proposed grant of a call option by P&R to the Trustee, entitling Regal REIT (or its trustee or nominee) to, in its sole discretion, acquire 100% of the issued share capital of and shareholder loans to the NP Target Company that, indirectly through its wholly-owned subsidiary, will own the North Point Hotel upon completion of its development (the “North Point Hotel Option”).

On 28 June 2013, the following legally binding and definitive agreements were entered into:-

(1) Share Purchase Agreement, pursuant to which P&R agreed to sell to the Trustee (or its nominee) the SW Target Company Shares, and assign to the Trustee (or its nominee) the SW Shareholder Loan for the SW Hotel Purchase Price (being HK$1,580 million), plus the Current Assets Adjustment, subject to the terms and conditions set out therein; and

(2) Option Agreement, pursuant to which P&R granted a call option to the Trustee, entitling the Trustee (or its nominee) to, in the Manager’s sole discretion, acquire the NP Target Company Shares, and be assigned the NP Shareholder Loan for up to the Maximum Final Exercise Price (being HK$1,825 million), plus the Current Assets Adjustment, subject to the terms and conditions set out therein.

P&R is principally engaged in development of properties for sale and/or rental through its subsidiaries and currently holds all the shares in the SW Target Company and the NP Target Company. It is a joint venture company incorporated in the British Virgin Islands with limited liability, held by Paliburg and Regal Hotels in equal shares, both of which are directly and indirectly controlled by Century City. Paliburg, Regal Hotels and Century City are all Hong Kong listed companies. For further information as to P&R’s holding structure, please refer to section 2.3 headed “Current Holding Structure of the New Hotels”.

The SW Target Company and the NP Target Company are companies incorporated in the British Virgin Islands solely for the purpose of holding the entire issued share capital of the SW Property Company (being the registered owner of the Sheung Wan Hotel) and the NP Property Company (being the registered owner of the North Point Hotel), respectively.

—23— LETTER TO THE UNITHOLDERS

The Sheung Wan Hotel and the North Point Hotel are currently under development and are expected to be completed (as evidenced by the issuance of an occupation permit) in the fourth quarter of 2013 and in the second quarter of 2014, respectively. While it was previously contemplated in the MOU Announcements that P&R would grant a call option in respect of the Sheung Wan Hotel, given the Sheung Wan Hotel is expected to be completed soon, P&R and the Trustee have agreed to enter into the Share Purchase Agreement, instead of an option agreement. The Share Purchase Agreement provides the specifications (as agreed by the Manager and P&R) to which the Sheung Wan Hotel is to be developed, and the Option Agreement provides the specifications (as agreed by the Manager and P&R) to which the North Point Hotel is to be developed.

2.2 Information on the New Hotels

2.2.1 Sheung Wan Hotel 1(b), 2(a), 2(b) 2(c)

2.2.1.1 Description 2(j)

The “Sheung Wan Hotel” is situated at Nos. 132-140 Bonham Strand, Sheung Wan, Hong Kong. Sheung Wan is adjacent to Central, the traditional Central Business District in Hong Kong, and the Sheung Wan Hotel is mostly surrounded by office developments with some small-scale residential buildings. Pursuant to the Share Purchase Agreement, the Sheung Wan Hotel is to be developed in accordance with the SW Specifications Summary, the key items of which are summarised below:

Number of Guestrooms and 248 guestrooms comprising 223 standard rooms, 18 Suites one-bedroom suites and 7 two-bedroom suites

Number of Storeys 34 storeys

Gross Floor Area Approximately 7,197 sqm

Covered Floor Area Approximately 9,617 sqm

Facilities A lobby lounge and a business centre

The Sheung Wan Hotel is expected to be completed in the fourth quarter of 2013 and will be branded as a “iclub by Regal (富薈酒店)” hotel.

2.2.1.2 Location

The Sheung Wan Hotel is located in Sheung Wan, offering convenient access to core business districts as well as major shopping and tourist areas. The Sheung Wan Hotel is within walking distance from the tram station on Des Voeux Road West and the Sheung Wan MTR Station. It is also accessible by taxis, buses and minibuses. Also within walking distance from the Sheung Wan Hotel is the Hong Kong-Macau Ferry terminal, which provides ferry and helicopter services to

—24— LETTER TO THE UNITHOLDERS

Macau, as well as ferry services to a number of cities in southern China including Zhongshan, Zhuhai and Panyu in Guangzhou, and Shekou in Shenzhen. Tsim Sha Tsui and Kowloon MTR Stations are both 15-minute drives from the Sheung Wan Hotel via the Western Harbour Crossing.

The Sheung Wan Hotel is close to a number of high-quality Grade A office buildings located in Sheung Wan including The Center, 181 Queen’s Road Central and Cosco Tower. It is also close to a number of tourist attractions, including Bonham Strand West (known for its specialty stores, quality dried foods and Chinese medicines), Des Voeux Road West (famous for its specialty stores selling varieties of exotic dried seafood) and Western Market (one of the oldest heritage buildings in Hong Kong, renovated in 1991 with themed shops).

2.2.1.3 Competition

In 2012, the following new hotels were completed in Sheung Wan: (i) Butterfly On Hollywood (offering 142 rooms); (ii) IBIS Hong Kong Central & Sheung Wan (offering 550 rooms); and (iii) Holiday Inn Express Hong Kong Soho (offering 299 rooms). These hotels are operated by hotel chain operators and have similar target travellers to the Sheung Wan Hotel. For further analysis of the competition conditions in respect of the Sheung Wan Hotel, please refer to Appendix 4 headed “Independent Property Valuer’s Valuation Reports” to this Circular.

2.2.1.4 Property Valuation

As at 25 June 2013, the Sheung Wan Hotel was valued by the Independent Property Valuer at HK$1,580 million. Such amount is equal to the SW Hotel Purchase Price and has taken into account the rent payable under the New Lease Agreement in respect of the Sheung Wan Hotel. For the assumptions of the Independent Property Valuer in determining this valuation, please refer to Appendix 4 headed “Independent Property Valuer’s Valuation Reports” to this Circular.

2.2.1.5 Lease Agreement, Lease Guarantee and Hotel Management Agreement

Concurrently with completion of the SW Transaction, Regal REIT (through the SW Property Company) will enter into the New Lease Agreement with the Lessee in respect of the entire Sheung Wan Hotel. The lease will commence from the date of its execution and terminate on the 31 December immediately following the fifth anniversary of the date of such New Lease Agreement, unless extended for a further five years at the sole discretion of the SW Property Company. The annual rent payable to the SW Property Company in respect of the first, second and third years of the lease term shall be 5.00%, 5.25% and 5.50% respectively of the SW Hotel Purchase Price. The rent payable to the SW Property Company in respect of each remaining Lease Year shall be determined based on a market rental review performed by an independent professional property valuer jointly appointed by the Lessee and the SW Property Company.

Regal Hotels will, at the same time as entering into the New Lease Agreement in respect of the Sheung Wan Hotel, enter into a lease guarantee pursuant to which Regal Hotels will guarantee: (a) the Lessee’s obligations to pay all amounts owing under such New Lease Agreement; and (b) the due observance and performance of such New Lease Agreement by the Lessee.

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A hotel management agreement will also be entered into between the relevant Lessor, Lessee, Regal Hotels and the Hotel Manager concurrently with the execution of such lease agreement.

For further details, please refer to sections 3.5 and 3.6 headed “Key Documentation — New Lease Agreements and New Lease Guarantees” and “Key Documentation — New Hotel Management Agreements” respectively.

2.2.1.6 Occupation Permit, Hotel Licence and Other Licences

The occupation permit for the Sheung Wan Hotel is expected to be granted by the Building Authority in the fourth quarter of 2013. On this basis, the operation of the Sheung Wan Hotel is anticipated to commence in or around the first quarter of 2014 as the Hotel Manager must first apply for a licence under the Hotel and Guesthouse Accommodation Ordinance (Chapter 349 of the Laws of Hong Kong) and other licences to enable the Lessee and the Hotel Manager to operate a hotel business at the Sheung Wan Hotel, with such applications only able to be submitted after the occupation permit is granted.

Regal REIT will receive income pursuant to the New Lease Agreement in respect of the Sheung Wan Hotel from the date of such agreement, being also the date of completion of the SW Transaction, irrespective of whether the Sheung Wan Hotel has commenced operations.

2.2.1.7 SW Interior Fit-Out Programme 2(d)

The construction of the Sheung Wan Hotel will include works to be completed under the SW Interior Fit-Out Programme. Such works will primarily be: (a) finishing works on interior flooring, walls and ceilings of the guestrooms, lobbies or corridors, hotel office and other areas of the Sheung Wan Hotel; and (b) procurement and installation in each guestroom of the related furniture, fixtures and equipment (including but not limited to minibar fridge, cabinets and television), in each case, in accordance with the specifications agreed under the Share Purchase Agreement. The estimated costs for the interior fit-out works (including installation of furniture, fixtures and equipment such as minibar fridge, cabinets and television) are HK$75.2 million.

The occupation permit for the Sheung Wan Hotel may be granted, and completion of the SW Transaction may occur, prior to completion of the SW Interior Fit-Out Programme. However, as the SW Hotel Purchase Price is based on the SW Appraised Value, which in turn assumes completion of the SW Interior Fit-Out Programme, P&R has undertaken under the Share Purchase Agreement to complete the SW Interior Fit-Out Programme by the Interior Fit-Out Long Stop Date at its own cost and expense. To facilitate the carrying out of any works under the SW Interior Fit-Out Programme not yet completed as at completion of the SW Transaction, the Interior Fit-Out Agent (a wholly-owned subsidiary of P&R) and the Guarantors will, at completion of the SW Transaction, enter into an Interior Fit-Out Agency Deed whereby the SW Property Company appoints the Interior Fit-Out Agent to manage and settle the Interior Fit-Out Contracts on its behalf. For further details, please refer to sections 3.1.7 and 3.4 headed “Key Documentation — Share Purchase Agreement — SW Interior Fit-Out Programme” and “Key Documentation — Interior Fit-Out Agency Deeds” respectively.

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2.2.1.8 Government Grants

The Sheung Wan Hotel, as with the other hotels currently owned by Regal REIT (other than the Regal Airport Hotel, which is leased by the Airport Authority Hong Kong to Regal REIT pursuant to a sublease), will be held pursuant to Government Grants. The Government Grants in respect of certain portions of the land on which the Sheung Wan Hotel is located will expire after 999 years from 7 February 1852 and from 26 March 1868 respectively. For details of the Government Grants relating to the Sheung Wan Hotel, please refer to Appendix 6 headed “Summary of Government Grants” to this Circular.

2.2.2 North Point Hotel 1(b), 2(a), 2(b), 2(c)

2.2.2.1 Description 2(j)

The “North Point Hotel” is situated at Nos. 14-20 Merlin Street, North Point, Hong Kong. The North Point Hotel is surrounded by residential, office and commercial developments and hotels. Pursuant to the Option Agreement, the North Point Hotel is to be developed in accordance with the NP Specifications Summary, the key items of which are summarised below:

Number of Guestrooms 338 guestrooms Number of Storeys 32 storeys Gross Floor Area Approximately 6,849 sqm Covered Floor Area Approximately 9,393 sqm Facilities A lobby lounge and a business centre

The North Point Hotel is expected to be completed in the second quarter of 2014 and will be branded as a “iclub by Regal (富薈酒店)” hotel.

2.2.2.2 Location

The North Point Hotel is located in North Point, one of the key decentralised business districts and a well-established residential area on Hong Kong Island. North Point benefits from extensive transport links such as the Eastern Corridor, providing convenient access to other districts on the Hong Kong Island. The North Point Hotel is within walking distance from the Fortress Hill MTR Station and Tin Hau MTR Station. It is also accessible by taxis, buses and trams.

The North Point Hotel is close to several office buildings located nearby Fortress Hill and Tin Hau, including 169 Electric Road, AIA Tower, Fortress Tower and Citicorp Centre. It is also close to various recreational facilities such as the Victoria Park, the Hong Kong Stadium and the Happy Valley Race Course which are easily accessible via MTR and buses.

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The Fortress Hill MTR Station is two stops away from the Causeway Bay MTR Station, one stop away from the Tin Hau MTR Station, and two stops away from the Quarry Bay MTR Station. Causeway Bay is a world-class retail destination, with key shopping developments such as Times Square, Lee Gardens, Hysan Place and SOGO Department Store. Quarry Bay is a decentralised business district where Island East, a significant office development, is situated.

2.2.2.3 Competition

Twenty One Whitfield, a boutique hotel offering 54 rooms, was the only new hotel in North Point completed in 2012. Due to its smaller size and different market positioning — offering long-stay packages to business travellers from the neighbouring office cluster — compared with the North Point Hotel, it is not expected to pose any significant competition. For further analysis of the competition conditions in respect of the North Point Hotel, please refer to Appendix 4 headed “Independent Property Valuer’s Valuation Reports” to this Circular.

2.2.2.4 Property Valuation

As at 25 June 2013, the North Point Hotel was valued by the Independent Property Valuer, at HK$1,650 million. Such amount is equal to the Initial Exercise Price and has taken into account the rent payable under the New Lease Agreement in respect of the North Point Hotel. For the assumptions of the Independent Property Valuer in determining the NP Initial Appraised Value of the North Point Hotel, please refer to Appendix 4 headed “Independent Property Valuer’s Valuation Reports” to this Circular.

2.2.2.5 Lease Agreement, Lease Guarantee and Hotel Management Agreement

Concurrently with completion of the NP Transaction, Regal REIT through the NP Property Company will enter into the New Lease Agreement with the Lessee in respect of the entire North Point Hotel. The lease will commence from the date of its execution and terminate on the 31 December immediately following the fifth anniversary of the date of such New Lease Agreement unless extended for a further five years at the sole discretion of the NP Property Company. The annual rent payable to the NP Property Company in respect of the first, second and third years of the lease term shall be 5.00%, 5.25% and 5.50% respectively of the Final Exercise Price. The rent payable to the NP Property Company in respect of each remaining Lease Year shall be determined based on a market rental review performed by an independent professional property valuer jointly appointed by the Lessee and the NP Property Company.

Regal Hotels will, at the same time as entering into the New Lease Agreement in respect of the North Point Hotel, enter into a lease guarantee pursuant to which Regal Hotels will guarantee: (a) the Lessee’s obligations to pay all amounts owing under such New Lease Agreement; and (b) the due observance and performance of such New Lease Agreement by the Lessee.

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A hotel management agreement will also be entered into between the relevant Lessor, Lessee, Regal Hotels and the Hotel Manager concurrently with the execution of such lease agreement.

2.2.2.6 Occupation Permit, Hotel Licence and Other Licences

The occupation permit for the North Point Hotel is expected to be granted by the Building Authority in the second quarter of 2014. On this basis, the operation of the North Point Hotel is anticipated to commence in or around the third quarter of 2014 as the Hotel Manager must first apply for a licence under the Hotel and Guesthouse Accommodation Ordinance (Chapter 349 of the Laws of Hong Kong) and other licences to enable the Lessee and the Hotel Manager to operate a hotel business at the North Point Hotel, with such applications only able to be submitted after the occupation permit is granted.

Regal REIT will receive income pursuant to the New Lease Agreement in respect of the North Point Hotel from the date of such agreement, being also the date of completion of the NP Transaction, irrespective of whether the North Point Hotel has commenced operations.

2.2.2.7 NP Interior Fit-Out Programme 2(d)

The construction of the North Point Hotel will include works to be completed under the NP Interior Fit-Out Programme. Such works will primarily be: (a) finishing works on interior flooring, walls and ceilings of the guestrooms, lobbies or corridors, hotel office and other areas of the North Point Hotel; and (b) procurement and installation in each guestroom of the related furniture, fixtures and equipment (including but not limited to minibar fridge, cabinets and television), in each case, in accordance with the specifications agreed under the Option Agreement. The estimated costs for the interior fit-out works (including installation of furniture, fixtures and equipment such as minibar fridge, cabinets and television) are HK$99.3 million.

The occupation permit for the North Point Hotel may be granted, and completion of the NP Transaction may occur, prior to completion of the NP Interior Fit-Out Programme. However, as the Final Exercise Price is based on the NP Updated Appraised Value, which in turn assumes completion of the NP Interior Fit-Out Programme, P&R has undertaken under the Option Agreement to complete the NP Interior Fit-Out Programme by the Interior Fit-Out Long Stop Date at its own cost and expense. To facilitate the carrying out of any works under the NP Interior Fit-Out Programme not yet completed as at completion of the NP Transaction, the Interior Fit-Out Agent (a wholly-owned subsidiary of P&R) and the Guarantors will, at completion of the NP Transaction, enter into an Interior Fit-Out Agency Deed whereby the NP Property Company appoints the Interior Fit-Out Agent to manage and settle the Interior Fit-Out Contracts on its behalf. For further details, please refer to sections 3.2.10 and 3.4 headed “Key Documentation — Option Agreement — NP Interior Fit-Out Programme” and “Key Documentation — Interior Fit-Out Agency Deeds” respectively.

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2.2.2.8 Government Grants

The North Point Hotel, as with other hotels currently owned by Regal REIT (other than the Regal Airport Hotel, which is leased by the Airport Authority Hong Kong to Regal REIT pursuant to a sublease), will be held pursuant to Government Grants. The Government Grants in respect of the land on which the North Point Hotel is located will expire after 75 years from 25 August 1994. For details of the Government Grants relating to the North Point Hotel, please refer to Appendix 6 headed “Summary of Government Grants” to this Circular.

2.2.3 iclub by Regal (富薈酒店)

The “iclub by Regal (富薈酒店)” is a new brand introduced by the Regal Hotels Group, which in addition to the Sheung Wan Hotel and the North Point Hotel, will apply to the Wanchai Regal iClub Hotel (which is currently branded as a “Regal iClub” hotel).

The “iclub by Regal (富薈酒店)” is positioned to be an upscale select-service hotel brand (typically with around 100 to 350 hotel guestrooms) complementing the “Regal” brand’s full service offering. The hotels are planned to be predominantly located in the world’s gateway cities and close to the financial centres, regional business centres, convention and exhibition venues, shopping and entertainment hubs, or popular tourist spots with sights and attractions, and conveniently accessed by efficient transport infrastructure. The “iclub by Regal (富薈酒店)” branded hotels are designed according to international quality hotel standards and feature contemporary, chic, trendy, stylish and modern décor and design. The guestrooms are designed with plenty of glass to balance indoor lighting and natural daylight, furnished with comfortable furniture and bedding and equipped with tech-savvy facilities such as LCD TV, iPod speaker, free internet and free WiFi, which are customized for international multi-tasking executives and leisure travellers.

“iclub by Regal (富薈酒店)” offers discerning tech-savvy business and leisure travellers a relaxed life-style, with built-in express check-in and check-out system for time conscious travellers, selective refreshments and beverages served at a cozy lounge, and purposeful facilities such as “iclub Business Center” with intimate, friendly and tasteful ambience. “iclub by Regal (富薈酒店)” also offers international business and leisure travellers a smart, dynamic, efficient, functional, convenient and pleasant travelling experience that meets the needs of contemporary international business travellers, at the right price with good value for money lodging. The symbol “i” stands for “international”, “intelligent” and “information technology enabled”.

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2.3 Current Holding Structure of the New Hotels

The current holding structure of the New Hotels is as follows:

Century City International Holdings Limited (Bermuda) 62.17%

Paliburg Holdings Limited (Bermuda)

51.28% Regal Hotels International Holdings 0.04% Limited (Bermuda) 50%

50%

P&R Holdings Limited (BVI)

100% 100% Plentiful Investments Limited Fortune Mine Limited (BVI) (BVI) SW Target NP Target (Note) 100% Group 100% Group Tristan Limited Wise Decade Investments Limited (HK) }}(HK) Sheung Wan Hotel North Point Hotel

Note: The issued share capital of Tristan Limited comprises two shares, one of which is held by Plentiful Investments Limited and the other share (the “Trust Share”) is held by P&R Holdings Limited on trust for Plentiful Investments Limited. Pursuant to the Share Purchase Agreement, P&R Holdings Limited will, prior to or at completion of the SW Transaction, transfer the Trust Share to Plentiful Investments Limited.

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2.4 Expected Holding Structure of the New Hotels

Immediately after the completion of the SW Transaction and the NP Transaction, and assuming no other changes to the holding structure of Regal REIT prior to such time, the expected holding structure of the New Hotels is as follows:

Regal Hotels International Holdings Limited (Bermuda) 74.55% Regal REIT (HK)

100% 100% 100% 100%

SW Nominee NP Nominee Regal Asset Holdings Wise Tower Limited (BVI) (BVI) Limited (BVI) (Bermuda)

100% 100% 100% 100%

Plentiful Investments Fortune Mine Limited Existing Holding Existing Holding Limited (BVI) Companies(1) Company(3) (BVI)

SW Target NP Target 100% 100% Group Group 100% 100%

Tristan Limited Wise Decade Existing Existing (2) (4) (HK) Investments Limited Property Companies Property Company }}(HK)

Sheung Wan North Point Initial Hotel Wanchai Regal iClub Hotel Hotel Properties Hotel

Notes:

(1) Regal REIT holds through Fieldstar Investments Limited, Yield Rich Limited, Fit Result Investments Limited, Chasehill Limited and Wide Lead Corporation, all legal and beneficial interests in Bauhinia Hotels Limited, Cityability Limited, Ricobem Limited, Gala Hotels Limited and Regal Riverside Hotel Limited, respectively.

(2) (a) Cityability Limited, Ricobem Limited, Gala Hotels Limited and Regal Riverside Hotel Limited hold all legal and beneficial interests in Regal Hongkong Hotel, Regal Kowloon Hotel, Regal Oriental Hotel and Regal Riverside Hotel, respectively; and (b) Regal Airport Hotel is leased by the Airport Authority Hong Kong to Bauhinia Hotels Limited pursuant to a sublease expiring on 30 December 2028.

(3) Regal REIT holds through Twentyfold Investments Limited all legal and beneficial interests in Sonnix Limited.

(4) Sonnix Limited holds all legal and beneficial interests in Wanchai Regal iClub Hotel.

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3. KEY DOCUMENTATION 2(aa)

3.1 Share Purchase Agreement 1(c), note to 2(s)

3.1.1 Acquisition of SW Target Company Shares and Assignment of SW Shareholder Loan 2(m), note to 2(s)

3.1.2 Consideration 2(k), note to 2(s)

The consideration payable by the Trustee to P&R pursuant to the Share Purchase Agreement is HK$1,580 million (the “SW Hotel Purchase Price”), plus the Current Assets Adjustment. As at 31 December 2012, the current assets of the SW Target Group amounted to HK$0.1 million. P&R will notify the Trustee of the Current Assets Adjustment shortly prior to completion of the SW Transaction, and provide evidence to the Trustee in respect of the same.

The total sum of the SW Hotel Purchase Price plus the Current Assets Adjustment reflects the consideration payable in respect of the acquisition of the SW Target Company Shares and the assignment of the SW Shareholder Loan, and (apart from the Deposit) will be payable at completion of the SW Transaction. The Deposit will be payable in the manner described below.

The SW Hotel Purchase Price, as well as the Current Assets Adjustment, have been arrived at on a willing buyer/seller in an arm’s length transaction basis, after taking into account the SW Appraised Value and completion of the SW Interior Fit-Out Programme.

The Manager does not contemplate any adjustments for current or non-current liabilities (as P&R and the Guarantors have warranted in the Share Purchase Agreement that the SW Target Group shall not, at completion of the SW Transaction, have any liabilities other than the SW Shareholder Loan that will also be acquired by the Trustee) or non-current assets (as there are currently no material non-current assets other than the Sheung Wan Hotel). Also, the Share Purchase Agreement contains specific covenants in terms consistent with market practice that give a significant degree of negative control to the Trustee in relation to the operation of the SW Target Group during the period between signing of the Share Purchase Agreement and completion of the SW Transaction. For example, the Share Purchase Agreement contains covenants that, among others, require the SW Target Group not to do nor agree (conditionally or unconditionally) to do the following except with the prior written consent of the Manager: (a) enter into any transaction or incur any liability except in the ordinary course of business; (b) dispose of any interest in the Sheung Wan Hotel; and (c) declare, pay or make any dividend or distribution or do or allow to be done anything which renders its financial position less favourable than at the date of the Share Purchase Agreement. These contractual protections mitigate the risk to the Trustee of any possible adverse changes to the assets and liabilities of the SW Target Group arising from the acts or omissions of P&R.

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3.1.3 Deposit

Within two Business Days following the satisfaction of the conditions described in paragraphs (a) and (b) of section 3.1.4 headed “Key Documentation — Share Purchase Agreement — Conditions Precedent” below, the Trustee shall pay the Deposit to P&R in cash.

The Deposit shall not be deposited into an escrow account and may be used by P&R without restriction, but P&R shall pay interest quarterly on the Deposit. Interest shall accrue from the date of payment up to the date the Deposit is refunded to the Trustee or applied towards part payment of the SW Hotel Purchase Price. The interest rate shall be calculated at the higher of the following:-

(a) 4.25% per annum, which is the interest rate of the notes due 2017 issued by Regal Hotels pursuant to its medium term note programme; and

(b) the weighted average effective interest cost to Regal REIT (taking into account the interest rate, issue price, placement fees and commissions) of the Notes used to finance the payment of the Deposit.

Currently, the Manager intends to finance the payment of the Deposit from the proceeds of the March 2013 Notes and the May 2013 Notes, which have a weighted average effective interest cost of 4.3047% per annum. In this case, the Deposit shall accrue interest at 4.3047% per annum.

The Deposit, together with any interest accrued and unpaid, shall be refundable in full upon the termination of the Share Purchase Agreement. As noted in section 3.1.1 above, the Guarantors have guaranteed the obligations of P&R pursuant to the Share Purchase Agreement, and this would include the refund of such Deposit. At completion of the SW Transaction, the Deposit and any interest accrued and unpaid in respect of the same will be applied against part of the SW Hotel Purchase Price.

3.1.4 Conditions Precedent

Completion of the SW Transaction is conditional upon the satisfaction or waiver of the following conditions:

(a) each of the Guarantors and Century City obtaining its shareholders’ and/or independent shareholders’ approval of the transactions contemplated by the SW Transaction Documents, as appropriate, in a form satisfactory to the Trustee and the Manager and in accordance with their respective articles of association or bye-laws and the Listing Rules (as the case may be);

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(b) Unitholders’ approval for: (i) the transactions contemplated under the Share Purchase Agreement and other transactions contemplated under, associated with and/or related to the SW Transaction; (ii) the transactions contemplated under the Facility Letter and other transactions contemplated under, associated with and/or related to the Vendor Facility; and (iii) the New CCT Waiver Application, in accordance with the Trust Deed and REIT Code;

(c) the Manager being satisfied with the results of: (i) its inspection and investigation as to the SW Target Group, including without limitation the financial, legal and contractual, taxation and trading position of the members of the SW Target Group and the title of the members of the SW Target Group to their respective assets (including, without limitation, the Sheung Wan Hotel); and (ii) its physical and technical inspection and investigation of the Sheung Wan Hotel as evidenced by the receipt of a building survey or other report in form and substance satisfactory to the Manager confirming that the building construction and finishes have been completed in compliance with the SW Specifications Summary;

(d) the Manager approving the title to the Sheung Wan Hotel and being satisfied that the SW Property Company has good marketable legal and beneficial title to the Sheung Wan Hotel (in accordance with the provisions of section 13 of the Conveyancing and Property Ordinance (Chapter 219 of the Laws of Hong Kong));

(e) the occupation permit required under the Buildings Ordinance (Chapter 123 of the Laws of Hong Kong) for the Sheung Wan Hotel having been obtained;

(f) all necessary consents or waivers being granted by third parties (including any governmental or official authorities) in connection with the transactions contemplated under the SW Transaction Documents and no statute, regulation or decision which would prohibit, restrict or materially delay the sale and purchase of the SW Target Company Shares, the assignment of the SW Shareholder Loan and/or the operation of the business by any member of the SW Target Group after completion of the SW Transaction having been proposed, enacted or taken by any governmental or official authority;

(g) the Trustee and the Manager being provided with such evidence as they may reasonably require confirming (to the satisfaction of the Manager and the Trustee) that all indebtedness under the existing bank loans of the SW Target Company and the SW Property Company shall be discharged, all shares in the capital of the SW Target Company and the SW Property Company shall be released from all encumbrances, and all other security created by the SW Target Company and the SW Property Company in connection with such existing bank loan (including, without limitation, the existing mortgage), shall be released on or before completion of the SW Transaction;

(h) the warranties remaining true and accurate and not misleading in any material respect at completion of the SW Transaction;

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(i) each of P&R and the Guarantors having complied fully with certain customary pre-completion obligations and otherwise having performed in all material respects all of the covenants and agreements required to be performed by them under the SW Transaction Documents; and

(j) no compulsory acquisition or resumption of the Sheung Wan Hotel and no notice of such intention received from any governmental authority.

The Manager has undertaken to use all reasonable endeavours to procure the satisfaction of the condition set out in paragraph (b) above and P&R and the Guarantors have each undertaken to use all reasonable endeavours to satisfy and/or procure the satisfaction of the conditions set out above (other than paragraphs (b) to (d)) as soon as reasonably practicable. The Trustee (acting on the recommendation and at the direction of the Manager) may in its sole discretion waive the conditions set out in paragraphs (h) and (i) above (subject to compliance with the REIT Code, the Listing Rules and any other applicable laws or regulation). If any of the conditions shall not have been satisfied or waived prior to the Long Stop Date, then the Trustee (acting on the recommendation and at the direction of the Manager) may, at its option without any penalty:

(a) postpone the date by which the conditions must be satisfied or waived; or

(b) terminate the Share Purchase Agreement (whereby the Deposit together with any interest accrued and unpaid shall be refunded to the Trustee).

3.1.5 Completion of the SW Transaction

Within five Business Days of the conditions precedent under the Share Purchase Agreement set out in section 3.1.4 headed “Key Documentation — Share Purchase Agreement — Conditions Precedent” above having been met to the satisfaction of the Trustee (or waived), the Trustee shall (acting on the recommendation and at the direction of the Manager) give a notice to P&R confirming that the Trustee is prepared to proceed with completion of the SW Transaction. Completion of the SW Transaction shall take place on such date as may be agreed in writing between the Trustee and P&R following the giving of such notice, and in any event within 10 Business Days of the giving of such notice.

At completion of the SW Transaction, among other things, the Deed of Tax Indemnity, the Interior Fit-Out Agency Deed, the New Lease Agreement, the New Lease Guarantee and the New Hotel Management Agreement in respect of the Sheung Wan Hotel (the agreed form of each being attached to the Share Purchase Agreement) will be executed. Also, the Trustee intends to nominate the SW Nominee to be the transferee of the SW Target Company Shares and the assignee of the SW Shareholder Loan at completion.

3.1.6 Construction Undertakings

P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) shall procure the SW Property Company to cause its building contractors to promptly and diligently proceed with and complete the building construction works in a proper and workmanlike manner

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in accordance with the relevant building contract plans and specifications and all applicable laws and regulations. The building contract plans and specifications are to be consistent with the SW Specifications Summary, and no deviation from the SW Specifications Summary is to be made without the Manager’s prior written approval.

3.1.7 SW Interior Fit-Out Programme

Pursuant to the Share Purchase Agreement, P&R has undertaken that it will complete, and/or will procure the completion of, the SW Interior Fit-Out Programme, by no later than the Interior Fit-Out Long Stop Date, at its sole cost and expense. The estimated costs for such works are HK$75.2 million. For details of the SW Interior Fit-Out Programme, please refer to section 2.2.1.7 headed “The SW Transaction and the NP Transaction — Information on the New Hotels — Sheung Wan Hotel — SW Interior Fit-Out Programme”.

Detailed specifications of the SW Interior Fit-Out Programme shall be submitted to the Manager for approval and the SW Interior Fit-Out Programme shall only be carried out in accordance with such detailed specifications so approved by the Manager. Any change of the agreed configurations or detailed specifications shall also be approved by the Manager in advance.

When a payment under the relevant Interior Fit-Out Contracts becomes payable, P&R shall provide the necessary funding to the SW Property Company or discharge and settle on behalf of the SW Property Company all payments payable by the SW Property Company under the relevant Interior Fit-Out Contracts. P&R shall also discharge all other commitments, responsibilities and obligations of the SW Property Company under the relevant Interior Fit-Out Contracts.

P&R shall further, by no later than the Interior Fit-Out Long Stop Date, hand over each relevant part of the premises subject to the SW Interior Fit-Out Programme to the SW Property Company and will also deliver to the SW Property Company all necessary fire permits, hotel licences, and relevant Government department consents, approvals and other licences, so that such part of the premises can be fit and lawful for letting to hotel guests and other occupants (as the case may be), and otherwise in a condition satisfactory to the Manager.

If any part of the SW Interior Fit-Out Programme has not been fully completed and handed over to the SW Property Company by the Interior Fit-Out Long Stop Date and accepted by the Manager, the Manager shall at its sole and absolute discretion, have the right to accept any completed part of the SW Interior Fit-Out Programme that it has not yet accepted, and take control of any uncompleted part of the SW Interior Fit-Out Programme, and P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) have undertaken to indemnify the Trustee and each member of the SW Target Group against any loss, damages, costs (including legal costs), expenses and other liabilities which the Trustee and/or each member of the SW Target Group may incur or suffer in connection with any failure of the SW Interior Fit-Out Programme to be fully completed and handed over to the SW Property Company in accordance with the provisions of the Share Purchase Agreement.

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P&R has undertaken under the Share Purchase Agreement that, in relation to each part of the SW Interior Fit-Out Programme, it has obtained all necessary approvals up to the relevant stage of the construction work from the relevant departments of the Government and it will obtain such other approvals as may be necessary from time to time until completion of the SW Interior Fit-Out Programme.

3.1.8 Representations, Warranties and Indemnity

The Share Purchase Agreement contains customary representations and warranties given by P&R and the Guarantors, including those in respect of P&R, the SW Target Group and the Sheung Wan Hotel. The Share Purchase Agreement also contains other representations and warranties given by P&R and the Guarantors to the effect that:

(a) the SW Target Group shall not, at completion of the SW Transaction, have any liabilities other than the SW Shareholder Loan that will also be acquired by the Trustee;

(b) the members of the SW Target Group shall, at completion of the SW Transaction, have no other operations other than the ownership of the Sheung Wan Hotel; and

P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) have undertaken to indemnify Regal REIT, the Trustee, the Manager and the SW Target Group for any loss, damages, costs (including legal costs), expenses and other liabilities which Regal REIT, the Trustee, the Manager or the SW Target Group may suffer as a result of any breach of the warranties.

The Share Purchase Agreement also sets out limitations on the liability of P&R and the Guarantors in respect of any breach of warranties. The maximum aggregate liability of P&R and the Guarantors in respect of all claims for breach of warranties under the Share Purchase Agreement shall not exceed the SW Hotel Purchase Price plus the Current Assets Adjustment. The Share Purchase Agreement provides for a limitation period of three years from the completion of the SW Transaction for all claims (other than claims relating to tax-related warranties, in which case the limitation period is seven years). Such limitation period is the result of arm’s length negotiations between the relevant parties and is consistent with that provided under the sale and purchase agreements in relation to the acquisition of the Initial Hotel Properties and the Wanchai Regal iClub Hotel. The Manager considers that the liability cap and limitation period are acceptable as they are in-line with normal commercial terms expected of similar transactions, and that Unitholders’ interests are sufficiently protected notwithstanding these limitations.

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3.2 Option Agreement 1(c), note to 2(s)

3.2.1 Call Option in respect of NP Target Company Shares and NP Shareholder Loan 2(m), note to 2(s)

Pursuant to the Option Agreement, P&R granted a call option to the Trustee, exercisable by the Trustee (acting on the instructions of the Manager) in its sole discretion. Upon exercise of the call option, P&R will sell to the Trustee (or its nominee) the NP Target Company Shares, representing 100% of the issued share capital of the NP Target Company, and assign to the Trustee (or its nominee) the NP Shareholder Loan, subject to the terms and conditions set out in the Option Agreement. The obligations of P&R under the Option Agreement are guaranteed by each of the Guarantors on a several basis in equal proportions.

For a summary of the terms of the Option Agreement that differ from the corresponding terms in the MOU, please refer to Appendix 7 to this Circular headed “Difference in Terms between the Option Agreement and the MOU”.

3.2.2 Conditions Precedent to Grant of the North Point Hotel Option

The grant of the North Point Hotel Option is conditional upon the satisfaction of the following conditions:

(a) each of the Guarantors and Century City obtaining its shareholders’ and/or independent shareholders’ approval of the transactions contemplated by the NP Transaction Documents, as appropriate, in a form satisfactory to the Trustee and the Manager and in accordance with their respective articles of association or bye-laws and the Listing Rules (as the case may be); and

(b) approval of Independent Unitholders of: (i) the transactions contemplated under the Option Agreement and other transactions contemplated under, associated with and/or related to the NP Transaction; (ii) the transactions contemplated under the Facility Letter and other transactions contemplated under, associated with and/or related to the Vendor Facility; and (iii) the New CCT Waiver Application, in accordance with the Trust Deed and REIT Code.

The Manager has undertaken to use all reasonable endeavours to procure the satisfaction of the condition set out in paragraph (b) above as soon as reasonably practicable and P&R and the Guarantors have each undertaken to use all reasonable endeavours to satisfy and/or procure the satisfaction of condition set out in paragraph (a) above as soon as reasonably practicable. If any of the conditions shall not have been satisfied on or before 5:00 p.m. Hong Kong time on 30 September 2013 (or such later date as may be agreed by P&R and the Trustee (acting on the recommendation and at the direction of the Manager)), then the Option Agreement shall terminate.

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3.2.3 Option Fee noteto2(s)

Within two Business Days following the satisfaction of the conditions to the grant of the North Point Hotel Option described in section 3.2.2 headed “Key Documentation — Option Agreement — Conditions Precedent to Grant of the North Point Hotel Option” above, the Trustee shall pay to P&R in cash an option fee of HK$10 million (the “Option Fee”). The Option Fee shall only be refundable if: (a) the occupation permit in respect of the North Point Hotel is not obtained by the Long Stop Date; (b) the Manager is not satisfied with its due diligence in respect of the North Point Hotel; (c) the condition to the exercise of the North Point Hotel Option has not been satisfied by the date specified in section 3.2.6 below (except where this is due to the fault of Regal REIT); (d) completion of the NP Transaction does not occur due to the fault of P&R; (e) the NP Updated Appraised Value is greater than the Maximum NP Updated Appraised Value or lower than the Minimum NP Updated Appraised Value and that the Manager or Trustee decides not to seek additional approval of the independent Unitholders for exercising the North Point Hotel Option on the basis of such NP Updated Appraised Value; or (f) the Option Agreement is terminated by the Trustee on the grounds that (i) P&R and the Guarantors have committed a material breach of warranties or any other term set out in the Option Agreement; or (ii) the NP Target Company or the NP Property Company has committed a material breach of the negative covenants set out in the Option Agreement. At completion of the NP Transaction, the Option Fee shall be applied against part of the Final Exercise Price.

3.2.4 Refundable Cash Collateral

The Refundable Cash Collateral shall not be deposited into an escrow account and may be used by P&R without restriction, but P&R shall pay interest quarterly on the Refundable Cash Collateral. Interest shall accrue from the date of payment up to the date the Refundable Cash Collateral is refunded to the Trustee. The interest rate shall be calculated at the higher of the following:

(a) 4.25% per annum, which is the interest rate of the notes due 2017 issued by Regal Hotels pursuant to its medium term note programme; and

Currently, the Manager intends to finance the payment of the Refundable Cash Collateral from the proceeds of the March 2013 Notes and the May 2013 Notes, which have a weighted average effective interest cost of 4.3047% per annum. In this case, the Refundable Cash Collateral shall accrue interest at 4.3047% per annum.

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The Refundable Cash Collateral, together with any interest accrued and unpaid, shall be refundable in full upon the earlier of: (i) the expiry of the North Point Hotel Option; (ii) the termination of the Option Agreement; and (iii) completion of the NP Transaction. As noted in section 3.2.1 above, the Guarantors have guaranteed the obligations of P&R pursuant to the Option Agreement, and this would include the refund of such Refundable Cash Collateral. At completion of the NP Transaction, the refunded Refundable Cash Collateral and any interest accrued and unpaid in respect of the same will be used to finance part of the Final Exercise Price.

3.2.5 Option Exercise Price 2(k), note to 2(s)

The initial exercise price payable by the Trustee to P&R pursuant to the Option Agreement is HK$1,650 million (the “Initial Exercise Price”), subject to the following adjustments:

(a) Initial adjustment: An initial adjustment based on an updated valuation of the North Point Hotel as appraised by the Independent Property Valuer as of the last month end date before the grant of the occupation permit for the North Point Hotel (the “NP Updated Appraised Value”). In particular:-

(i) if the NP Updated Appraised Value is lower than the NP Initial Appraised Value, the exercise price will be adjusted to the NP Updated Appraised Value; or

(ii) if the NP Updated Appraised Value is higher than the NP Initial Appraised Value, the exercise price will be adjusted to the average of the NP Updated Appraised Value and the NP Initial Appraised Value.

(b) Current Assets Adjustment: In addition to the aforesaid adjusted exercise price (the “Final Exercise Price”), the Trustee may be required to pay the Current Assets Adjustment. As at 31 December 2012, the current assets of the NP Target Group amounted to HK$0.1 million. P&R will notify the Trustee of the Current Assets Adjustment shortly prior to completion of the NP Transaction, and provide evidence to the Trustee in respect of the same.

The total sum of the Final Exercise Price plus the Current Assets Adjustment reflects the consideration payable in respect of the acquisition of the NP Target Company Shares and the assignment of the NP Shareholder Loan, and (apart from the Refundable Cash Collateral) will be payable at completion of the NP Transaction if the North Point Hotel Option is exercised. The Refundable Cash Collateral will be payable in the manner described above.

The Initial Exercise Price, as well as the Current Assets Adjustment, have been arrived at on a willing buyer/seller in an arm’s length transaction basis, after taking into account the NP Initial Appraised Value and completion of the NP Interior Fit-Out Programme.

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The Manager does not contemplate any adjustments for current or non-current liabilities (as P&R and the Guarantors have warranted in the Option Agreement that the NP Target Group shall not, at completion of the NP Transaction, have any liabilities other than the NP Shareholder Loan that will also be acquired by the Trustee) or non-current assets (as there are currently no material non-current assets other than the North Point Hotel). Also, the Option Agreement contains specific covenants in terms consistent with market practice that give a significant degree of negative control to the Trustee in relation to the operation of the NP Target Group during the period between signing of the Option Agreement and completion of the NP Transaction. For example, the Option Agreement contains covenants that, among others, require the NP Target Group not to do nor agree (conditionally or unconditionally) to do the following except with the prior written consent of the Manager: (a) enter into any transaction or incur any liability except in the ordinary course of business; (b) dispose of any interest in the North Point Hotel; and (c) declare, pay or make any dividend or distribution or do or allow to be done anything which renders its financial position less favourable than at the date of the Option Agreement. These contractual protections mitigate the risk to the Trustee of any possible adverse changes to the assets and liabilities of the NP Target Group arising from the acts or omissions of P&R.

3.2.6 Option Exercise Mechanics

The Trustee, acting on the instructions of the Manager, may choose to conditionally exercise the North Point Hotel Option by delivering an exercise notice to P&R during the option exercise period (that is, within 30 days after the occupation permit for the North Point Hotel has been obtained (as notified by P&R to the Trustee and the Manager)). Before instructing the Trustee and delivering the exercise notice, the Manager shall be satisfied with the results of its due diligence in respect of the North Point Hotel, including being satisfied that the acquisition of the North Point Hotel will comply with REIT Code requirements. The exercise notice will become unconditional (and the North Point Hotel Option will be exercised) once all relevant and applicable provisions of the REIT Code and the Listing Rules have been complied with, including any further unitholder or shareholder approvals required under such code and rules.

If the above condition has not been complied with within three months from the date of the exercise notice, or such later date as may be agreed between P&R and the Trustee (acting on the recommendation and at the direction of the Manager), then the North Point Hotel Option will lapse with effect from the aforementioned date and the NP Transaction will not complete.

For the avoidance of doubt, the approvals of the Independent Unitholders currently sought at the EGM by way of Ordinary Resolutions do not cover the situation where: (i) the NP Updated Appraised Value exceeds the Maximum NP Updated Appraised Value or falls below the Minimum NP Updated Appraised Value, and (ii) the parties to the Option Agreement mutually agree that the North Point Hotel Option shall not automatically expire under the provision set out in section 3.2.8(a) below. If the exercise price should exceed the Maximum Adjusted Final Exercise Price, the Manager shall seek additional approval of the Independent Unitholders before exercising the North Point Hotel Option at such exercise price.

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3.2.7 Completion of NP Transaction

Completion of the NP Transaction shall take place on such date as may be agreed in writing by the Trustee and P&R, and in any event within 10 Business Days of the day on which the exercise notice becomes unconditional.

At completion of the NP Transaction, among other things, the Deed of Tax Indemnity, the Interior Fit-Out Agency Deed, the New Lease Agreement, the New Lease Guarantee and the New Hotel Management Agreement in respect of the North Point Hotel (the agreed form of each being attached to the Option Agreement) will be executed. Also, the Trustee intends to nominate the NP Nominee to be the transferee of the NP Target Company Shares and the assignee of the NP Shareholder Loan.

3.2.8 Expiry of the North Point Hotel Option

Unless otherwise agreed between P&R and the Trustee (acting on the instructions of the Manager), the North Point Hotel Option will automatically expire if:

(a) the NP Updated Appraised Value is greater than the Maximum NP Updated Appraised Value or lower than the Minimum NP Updated Appraised Value;

(b) the occupation permit for the North Point Hotel is not obtained by the Long Stop Date;

(d) any condition to the exercise of the North Point Hotel Option has not been satisfied by the date specified in section 3.2.6 above.

3.2.9 Construction Undertakings

P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) shall procure the NP Property Company to cause its building contractors to promptly and diligently proceed with and complete the building construction works in a proper and workmanlike manner in accordance with the relevant building contract plans and specifications and all applicable laws and regulations. The building contract plans and specifications are to be consistent with the NP Specifications Summary, and no deviation from the NP Specifications Summary is to be made without the Manager’s prior written approval.

3.2.10 NP Interior Fit-Out Programme

Pursuant to the Option Agreement, P&R has undertaken that it will execute and complete, and/or will procure the completion of, the NP Interior Fit-Out Programme, by no later than the Interior Fit-Out Long Stop Date, at its sole cost and expense. The estimated costs for such works are

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HK$99.3 million. For details of the NP Interior Fit-Out Programme, please refer to section 2.2.2.7 headed “The SW Transaction and the NP Transaction — Information on the New Hotels — North Point Hotel — NP Interior Fit-Out Programme”.

Detailed specifications of the NP Interior Fit-Out Programme shall be submitted to the Manager for approval and the NP Interior Fit-Out Programme shall only be carried out in accordance with such detailed specifications so approved by the Manager. Any change of the agreed configurations or detailed specifications shall also be approved by the Manager in advance.

P&R shall execute and complete the NP Interior Fit-Out Programme by the Interior Fit-Out Long Stop Date at its sole cost and expense. When a payment under the relevant Interior Fit-Out Contracts becomes payable, P&R shall provide the necessary funding to the NP Property Company or discharge and settle on behalf of the NP Property Company all payments payable by the NP Property Company under the relevant Interior Fit-Out Contracts. P&R shall also discharge all other commitments, responsibilities and obligations of the NP Property Company under the relevant Interior Fit-Out Contracts.

P&R shall further, by no later than the Interior Fit-Out Long Stop Date, hand over each relevant part of the premises subject to the NP Interior Fit-Out Programme to the NP Property Company and will also deliver to the NP Property Company all necessary fire permits, hotel licences, and relevant Government department consents, approvals and other licences, so that such part of the premises can be fit and lawful for letting to hotel guests and other occupants (as the case may be), and otherwise in a condition satisfactory to the Manager.

If any part of the NP Interior Fit-Out Programme has not been fully completed and handed over to the NP Property Company by the Interior Fit-Out Long Stop Date and accepted by the Manager, the Manager shall at its sole and absolute discretion, have the right to accept any completed part of the NP Interior Fit-Out Programme that it has not yet accepted, and take control of any uncompleted part of the NP Interior Fit-Out Programme, and P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) have undertaken to indemnify the Trustee and each member of the NP Target Group against any loss, damages, costs, expenses and other liabilities which the Trustee and/or each member of Target Group may incur or suffer in connection with any failure of the NP Interior Fit-Out Programme to be fully completed and handed over to the NP Property Company in accordance with the provisions of the Option Agreement.

P&R has undertaken under the Option Agreement that, in relation to each part of the NP Interior Fit-Out Programme, it has obtained all necessary approvals up to the relevant stage of the construction work from the relevant departments of the Government and it will obtain such other approvals as may be necessary from time to time and until completion of the NP Interior Fit-Out Programme.

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3.2.11 Representations, Warranties and Indemnity

The Option Agreement contains customary representations and warranties given by P&R and the Guarantors, including those in respect of P&R, the NP Target Group and the North Point Hotel. The Option Agreement also contains other representations and warranties given by P&R and the Guarantors to the effect that:

(a) the NP Target Group shall not, at completion of the NP Transaction, have any liabilities other than the NP Shareholder Loan that will also be acquired by the Trustee;

(b) the members of the NP Target Group shall, at completion of the NP Transaction, have no other operations other than the ownership of the North Point Hotel; and

P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) have undertaken to indemnify Regal REIT, the Trustee, the Manager and the NP Target Group for any loss, damages, costs (including legal costs), expenses and other liabilities which Regal REIT, the Trustee, the Manager or the NP Target Group may suffer as a result of any breach of the warranties.

The Option Agreement also sets out limitations on the liability of P&R and the Guarantors in respect of any breach of warranties. The maximum aggregate liability of P&R and the Guarantors in respect of all claims for breach of warranties under the Option Agreement shall not exceed the Final Exercise Price plus the Current Assets Adjustment. The Option Agreement provides for a limitation period of three years from the completion of the NP Transaction for all claims (other than claims relating to tax-related warranties, in which case the limitation period is seven years). Such limitation period is the result of arm’s length negotiations between the relevant parties and is consistent with or more favourable than other transactions that Regal REIT has entered into in the past. The Manager considers that the liability cap and limitation period are acceptable as they are in-line with normal commercial terms expected of similar transactions, and that Unitholders’ interests are sufficiently protected notwithstanding these limitations.

3.3 Deeds of Tax Indemnity

P&R and the Guarantors will at each of completion of the SW Transaction and completion of the NP Transaction, enter into the deed of tax indemnity (each a “Deed of Tax Indemnity” and collectively, the “Deeds of Tax Indemnity”) in favour of (in respect of the Share Purchase Agreement) the Trustee and the SW Target Group and (in respect of the Option Agreement) the Trustee and the NP Target Group. Pursuant to the Deeds of Tax Indemnity, P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) will covenant, undertake and agree with the respective beneficiaries that they will indemnify on demand the respective beneficiaries in respect of, among other things, any liability for taxation resulting from or by reference to any event occurring on or before completion of the SW Transaction or

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(as the case may be) completion of the NP Transaction or in respect of any income, profits or gains earned, accrued or received by any of the SW Target Group or the NP Target Group (as the case may be) on or before completion of the SW Transaction or the NP Transaction (as the case may be).

A claim can be made on or prior to the seventh anniversary of the Deed of Tax Indemnity.

3.4 Interior Fit-Out Agency Deeds

To facilitate the carrying out of any works under the Interior Fit-Out Programmes not completed as at completion of the SW Transaction or the NP Transaction (as the case may be), the Interior Fit-Out Agent (a wholly-owned subsidiary of P&R) and the Guarantors will at each of completion of the SW Transaction and completion of the NP Transaction enter into agency deeds (the “Interior Fit-Out Agency Deeds” and each an “Interior Fit-Out Agency Deed”) with the SW Property Company or NP Property Company (each a “Property Company”), whereby the relevant Property Company appoints the Interior Fit-Out Agent to manage and settle the Interior Fit-Out Contracts on its behalf. No additional amount is payable by the Property Companies under the Interior Fit-Out Agency Deeds as all costs and expenses relating to the Interior Fit-Out Programme shall be borne by P&R. Unless the relevant Property Company has given its prior written consent (which, in the case of (i) below, shall not be unreasonably withheld), the Interior Fit-Out Agent shall not have any power to commit that Property Company to:

(i) assume any liability whatsoever, other than liability to pay contract sums which, in aggregate and combined with contract sums already paid or incurred in respect of the Interior Fit-Out Programme prior to the execution of the Interior Fit-Out Agency Deed, do not amount to more than the estimated cost of the relevant Interior Fit-Out Programme, together with cost overruns limited to 30% of such estimated cost, in respect of the Interior Fit-Out Contracts; or

(ii) encumber any of its assets or discharge any other obligation.

The Interior Fit-Out Agent is required to coordinate and ensure the carrying out and completion of the Interior Fit-Out Programme in accordance with the terms of the Share Purchase Agreement or (as the case may be) Option Agreement. The Guarantors (on a several basis in equal proportions between the Guarantors) will guarantee the Interior Fit-Out Agent’s obligations under the Interior Fit-Out Agency Deeds and has undertaken to indemnify the relevant Property Company against all losses and damages sustained by it from any non-payment or default of any kind by the Interior Fit-Out Agent. The Interior Fit-Out Agent has undertaken to indemnify the relevant Property Company from and against all costs, losses and liabilities arising from the Interior Fit-Out Contracts, and has agreed to, among others, settle all payments on behalf of the relevant Property Company when due or payable and to procure that project managers, consultants and other professional advisers discharge their duties under the Interior Fit-Out Contracts.

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3.5 New Lease Agreements and New Lease Guarantees

3.5.1 General noteto2(s)

The SW Property Company and the NP Property Company will become subsidiaries of Regal REIT upon completion of the SW Transaction and the NP Transaction, respectively. Each of the SW Property Company and NP Property Company will, at completion of the SW Transaction or completion of the NP Transaction (as the case may be), grant to the Lessee leases to the Sheung Wan Hotel and North Point Hotel pursuant to a lease agreement (each a “New Lease Agreement” and collectively, the “New Lease Agreements”) carrying the terms described below.

3.5.2 Term

The lease will be for a term commencing from the date of the relevant New Lease Agreement (which will be on the same date of completion of the SW Transaction or the NP Transaction, as the case may be) and ending on the 31 December immediately following the fifth anniversary of the date of the relevant New Lease Agreement. The lease term may be extended for a further five years at the Lessor’s sole discretion.

3.5.3 Rent and Deposits noteto2(s)

The rent payable to the Lessor (excluding rates, government rent, utility charges and other sums payable by the Lessee under the New Lease Agreements) in respect of the relevant New Lease Agreement shall be:-

(a) in respect of the first, second and third years of the lease term, 5.00%, 5.25% and 5.50% respectively of the SW Hotel Purchase Price or the Final Exercise Price, as applicable; and

(b) in respect of the remainder of the original lease term and any extension thereof, such rent (comprising the Base Rent and the Variable Rent) as to be determined based on a market rental review for each Lease Year performed by an independent professional property valuer jointly appointed by the Lessee and Lessor.

The Lessee shall, during the lease term of each New Lease Agreement, maintain with the Lessor a security deposit (in cash or other form of acceptable collateral) equivalent to:

(a) in respect of the first, second and third years of the lease term, three months’ rental, rates and Government rent; and

(b) in respect of the remainder of the original lease term and any extension thereof, such amount which shall be the higher of (i) the amount of which an independent professional property valuer jointly appointed by the Lessor and the Lessee determines to be the market rate of deposit upon market rental review; and (ii) three months’ Base Rent, rates and Government rent,

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in respect of the relevant New Hotel, to secure the due observance and performance by the Lessee of its obligations under the relevant New Lease Agreement. The Lessor shall (without prejudice to any other right or remedy) be entitled to deduct from such security deposit any payments or charges payable under the relevant New Lease Agreement and any costs, expenses, loss or damage sustained by the Lessor as a result of any breach by the Lessee of its obligations under the relevant New Lease Agreement.

The security deposit shall be refunded to the Lessee by the Lessor, without interest, within 14 days after the later of: (i) the expiration of the New Lease Agreement; or (ii) delivery of vacant possession of the relevant property to the Lessor in accordance with the relevant New Lease Agreement, and in each case, after settlement of any claims by the Lessor against the Lessee for any arrears in payments or charges payable by the Lessee of its obligations under the relevant New Lease Agreement.

3.5.4 Right and Obligation to Operate

The Lessee has the rights and obligations under each New Lease Agreement, after the issuance of the hotel licence in respect of the relevant New Hotel, to manage and operate the relevant New Hotel at the same or greater management and operating standards as what are prevailing in hotels of comparable size, location, level of technology and quality of service in Hong Kong, and shall provide the hotel services of a comparable standard. The Lessee has been granted under each New Lease Agreement a right to license to P&R the relevant New Hotel for the period commencing on the date of the relevant New Lease Agreement and ending on the date that the hotel licence in respect of the relevant New Hotel is granted (both days inclusive).

As permitted under each New Lease Agreement, the Manager understands from the Lessee that it intends to delegate the operation and management of the relevant New Hotel to the Hotel Manager pursuant to the relevant New Hotel Management Agreement. For further details in relation to the New Hotel Management Agreements, please refer to section 3.6 headed “Key Documentation — New Hotel Management Agreements” below.

During the term of the relevant New Lease Agreement, the Lessee shall at its own cost and expense, among other things, maintain and promptly renew the hotel licence and other licences to enable the Hotel Manager to operate the relevant New Hotel, comply with all the conditions imposed under the hotel licence and other licences, maintain the relevant New Hotel in good operating conditions and repair and maintain insurance in respect of the relevant New Hotel.

3.5.5 Routine Maintenance and Repair

The Lessee is primarily responsible, at its sole cost and expense, for the repair and maintenance of the interior and exterior of the relevant New Hotel subject to the New Lease Agreement, including without limitation, electrical and mechanical equipment, floor coverings, furniture, grounds and landscaping, plumbing, air-conditioning and ventilation, telephone equipment and

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life and safety/security system. In addition to the foregoing, the Lessee shall, at its sole cost and expense, maintain and repair all structural parts of the relevant New Hotel, including but not limited to, foundations, roof, external walls, external and internal structural walls, columns, beams and supports, external pipes, sewages, and drains.

3.5.6 Lease Guarantees noteto2(s)

Regal Hotels will, at the same time as entering into the relevant New Lease Agreement, enter into a lease guarantee (each a “New Lease Guarantee” and collectively, the “New Lease Guarantees”) pursuant to which Regal Hotels will guarantee: (a) the Lessee’s obligations to pay to the relevant Lessor and the Trustee, on demand by the relevant Lessor or the Trustee (at the direction of the Manager), all amounts (including, without limitation, all rents, other charges and outgoings, interest, default interest, fees and costs) from time to time owing or payable to the relevant Lessor under the relevant New Lease Agreement; and (b) the due observance and performance of all terms, conditions, covenants, agreements and obligations contained in the relevant New Lease Agreement, and on the part of the Lessee to be observed and performed.

3.5.7 Early Termination

The Lessor shall have the right to terminate the relevant New Lease Agreement at any time during the term of the relevant New Lease Agreement by giving six months’ prior written notice to the Lessee but without compensation interest or costs paid by the Lessor to the Lessee and the Lessee will not have any claim whatsoever against the Lessor for such early termination of the New Lease Agreement.

The Lessor shall also have the right to terminate the relevant New Lease Agreement in the event of, among other things, failure by the Lessee to make rental payments or breach by the Lessee of certain material undertakings under the relevant New Lease Agreement or relevant New Hotel Management Agreement.

The Manager intends, at the expiry of the relevant New Lease Agreement (at which time the relevant New Hotel will have been in operation for some length of time), to explore all commercially viable options then available in respect of the relevant New Hotel. Depending on the prevailing circumstances and market conditions at such time, this may include extending the lease term of the relevant New Lease Agreement, negotiating with interested parties for the lease of the relevant New Hotel and/or entering into a hotel management agreement with the Hotel Manager or another appropriate hotel operator, for the operation of such New Hotel.

3.6 New Hotel Management Agreements 2(g), noteto2(s)

3.6.1 General

The Lessee, the relevant Lessor, Regal Hotels and the Hotel Manager, will enter into a hotel management agreement (each a “New Hotel Management Agreement” and collectively, the “New Hotel Management Agreements”) concurrently with the signing of the relevant New

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Lease Agreement. The Hotel Manager will be engaged to act as the exclusive operator and manager of the relevant New Hotel to supervise, direct and control the management, operation and promotion of the business of the relevant New Hotel during the operating term of the relevant New Hotel Management Agreement.

The Lessor of the relevant New Hotel is a party to the relevant New Hotel Management Agreement since the term of each New Hotel Management Agreement may exceed the corresponding New Lease Agreement if the New Lease Agreement is terminated early or not renewed after the initial term.

During the term of each New Lease Agreement, the Lessee will assume the obligations of the “Owner” under the relevant New Hotel Management Agreement. For the purpose of this section, the “Owner” shall, during the term of the New Lease Agreements, mean the Lessee and thereafter (i.e. in the case of early termination of the New Lease Agreement) the “Owner” shall mean the Lessor unless a substitute lessee is found.

3.6.2 Operating Term

The term of the appointment of the Hotel Manager is 10 years, from the date of signing of the relevant New Hotel Management Agreement.

3.6.3 Operation of the relevant New Hotel

The Hotel Manager is required under the relevant New Hotel Management Agreement to operate the relevant New Hotel solely under the “iclub by Regal (富薈酒店)” hotel brand name and to act in good faith, to exercise due care and diligence and with full control and discretion, to operate, manage and promote the business of the relevant New Hotel, to provide all services lawfully or properly provided by a hotel of comparable standard as the relevant New Hotel and to act in the best interests of the Owner with a view to optimizing profit of the relevant New Hotel.

All hotel employees are to be employees of the Hotel Manager, and it has sole discretion and authority in the selection and employment of all hotel employees necessary for the proper operation of the relevant New Hotel. However, the Hotel Manager shall obtain the Owner’s approval (which shall not be unreasonably withheld) prior to selecting and employing the general manager and the financial controller of the relevant New Hotel. All costs and expenses shall form part of the Hotel Operating Expenses.

The Hotel Manager is also required to maintain all licences (other than the hotel licence and some other licences set out in section 3.6.11 headed “Key Documentation — New Hotel Management Agreements — Lessor’s Obligation to Maintain Hotel Licence and Other Licences” below) in respect of the operation and management of the relevant New Hotel.

The Hotel Manager is required to submit to the Owner an annual operating budget for the Owner’s approval. If any part of the operating budget cannot be agreed by the Owner and the Hotel Manager, the items in dispute shall be referred to an independent expert possessing the

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relevant professional qualifications jointly appointed by the Owner and the Hotel Manager for resolution and such resolution shall be final and binding upon the Owner and the Hotel Manager. The Hotel Manager shall operate the relevant New Hotel in accordance with the approved operating budget and shall not deviate materially from the approved operating budget without the Owner’s prior written consent.

3.6.4 Hotel Management Fee

The Hotel Manager is entitled to payment by the Owner of a hotel management fee comprising of:

(a) a hotel management base fee which is equal to:

(i) for so long as the relevant New Lease Agreement is in subsistence, an amount equal to 1% of Gross Revenues; or

(ii) in any other cases during the term of the New Hotel Management Agreement, an amount equal to 2% of Gross Revenues; and

(b) a hotel management incentive fee which is equal to:

(i) for so long as the relevant New Lease Agreement is in subsistence, an amount equal to 1% of the excess of the Adjusted GOP over (1) the hotel management base fee and (2) the Fixed Charges; or

(ii) in any other cases during the term of the New Hotel Management Agreement, an amount equal to 5% of the excess of the Adjusted GOP over (1) the hotel management base fee and (2) the Fixed Charges.

For so long as the New Lease Agreement is in subsistence, the hotel management fee is to be paid annually in arrears from the Owner’s own funds and is subordinated to all rent due under the relevant New Lease Agreement (i.e. the Owner will pay all rents due under the New Lease Agreement to the Lessor before the Owner pays the hotel management fee to the Hotel Manager). After the expiration or earlier termination of the relevant New Lease Agreement, the hotel management fee is to be paid monthly in arrears.

3.6.5 Marketing Fee and Reimbursable Marketing Expenses

The Hotel Manager is entitled to charge a marketing fee at no more than 1% of the Total Hotel Revenue for each Fiscal Year for the purposes of participating in national and international advertising and mandatory corporate marketing programs approved by the Owner in the operating budget. In addition to the above, the Hotel Manager is also entitled to produce promotions and participate in trade shows and other sales activities for the relevant New Hotel and all such costs (which are budgeted for and approved by the Owner) shall be reimbursed by the Owner to the Hotel Manager.

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3.6.6 Routine Repairs and Maintenance

Routine repairs and maintenance are to be carried out by the Hotel Manager in accordance with an annual repairs and maintenance estimate to be approved by the Owner. The structural maintenance and repair of the relevant New Hotel shall be the responsibility of the Owner and the costs shall form part of the Hotel Operating Expenses for the relevant New Hotel.

3.6.7 Furniture, Fixtures and Equipment Reserve & Expenditure

The Lessee is required for the first three Lease Years of the respective New Lease Agreement (or until the date that the corresponding New Lease Agreement is terminated, if earlier) to fund the actual cost of any FF&E (the “FF&E Expenditure”).

Thereafter, the Lessor is obligated to maintain an FF&E Reserve (all funds in which shall belong to the Lessor) with an amount, equivalent to 2% of the Total Hotel Revenue for the preceding calendar month as set out in the Profit and Loss Statement, to be set aside monthly. Further, as part of its review for each Lease Year, the independent professional property valuer may determine a percentage of the Total Hotel Revenue, as part of or in addition to the aforesaid amount set aside, which the Lessee is obligated to contribute. After reviewing the applicable Audited Report and taking into account the contributions made by the Lessee, if any, the Lessor has the discretion to set aside any additional amount on account of the FF&E Reserve.

Within two months from the end of each Fiscal Year, the Hotel Manager shall submit to the Lessor and (during the term of the New Lease Agreement) the Lessee for approval, a proposed estimate of expenditure for the ensuing Fiscal Year for the necessary additions to and replacement of the relevant New Hotel’s FF&E (the “FF&E Budget”). The final decision as to whether or not to approve the FF&E Budget shall be made by the Lessor. Failure of the Lessor or the Lessee (as the case may be) to disapprove shall be deemed to constitute its approval.

For the first three Lease Years of the respective New Lease Agreement (or until the date that the corresponding New Lease Agreement is terminated, if earlier), the Hotel Manager may, in accordance with the approved FF&E Budget, pay for additions to and/or replacement of FF&E (with such costs to be reimbursed by the Lessee as per above).

Thereafter, the Hotel Manager may, in accordance with the approved FF&E Budget, withdraw money from the FF&E Reserve to pay for additions to and/or replacement of FF&E. Any amount remaining in the FF&E Reserve at the close of each Lease Year shall be carried forward and be retained in the FF&E Reserve for the subsequent Lease Year(s), but shall not be taken into account when calculating the contribution to the FF&E Reserve for the subsequent Lease Year(s).

3.6.8 Capital Additions

The Hotel Manager is required to submit a budget in respect of planned capital expenditure (save and except those investments falling within the definition of FF&E) (the “Capital Additions”) for the Lessor’s and/or (during the term of the New Lease Agreement) the Lessee’s approval. In the event the Lessor and/or the Lessee (as the case may be) disapproves or raises any objection

—52— LETTER TO THE UNITHOLDERS

to the proposed budget or any part thereof, the Lessor and the Lessee shall co-operate with each other in good faith to resolve the disputed or objectionable items. If the disputed or objectionable items cannot be resolved by mutual agreement, the final decision as to whether or not to approve the capital budget or any changes thereto shall be made by the Lessor.

Once approved, the Hotel Manager shall carry out Capital Additions in accordance with the approval of the Lessor and (during the term of the New Lease Agreement) the Lessee as to the design, construction standard, and other material aspects of the proposed capital alterations or additions. All costs relating to Capital Additions required to conform with legal requirements shall be borne by the Lessor. All other costs and expenses of Capital Additions shall be borne by the Lessor and the Lessee in the manner agreed between them and shall not be paid from the Hotel Operating Expenses or from the FF&E Reserve.

3.6.9 Insurances

Each Lessor is required to maintain property insurance on the relevant New Hotel including all FF&E and the Operating Equipment at not less than 100% of replacement costs. During the term of the New Lease Agreement, insurance premiums will be reimbursed to the Lessor by the Lessee and will be treated as Fixed Charges. The policy shall include the Lessee (during the term of the New Lease Agreement) and the Hotel Manager as additional insureds.

The Owner is required to maintain business interruption insurance covering loss of profit for the Owner for a minimum period of 12 months resulting from interruption or cessation of operation of the relevant New Hotel. The insurance premiums are treated as the Hotel Operating Expenses. The Lessor and the Hotel Manager will be included as additional insureds.

The Hotel Manager is required to maintain third party liability insurance and other insurances against items like theft or damage to guests’ properties with a combined single limit for each occurrence of not less than HK$100 million as well as workman compensation insurance, employers’ liability insurance, insurances required by law and other insurances as the Hotel Manager shall deem necessary. The insurance premiums are treated as Hotel Operating Expenses. The Lessor and (during the term of the New Lease Agreement) the Lessee will be included as additional insureds.

If the Hotel Manager or the Owner hires an outside contractor for any repair or maintenance work for a New Hotel, the Hotel Manager or the Owner shall provide comprehensive general liability insurance insuring the contractor for the work being done. The Hotel Manager, the Lessor and (during the term of the New Lease Agreement) the Lessee will be included as additional insureds.

All insurance proceeds in respect of property damage shall be deposited into a bank account of the Lessor, operated by the joint signatories designated by the Lessor and the Hotel Manager. All monies withdrawn from such accounts shall be applied for repairs or replacement of the relevant New Hotel, together with replacing any FF&E and Operating Equipment.

—53— LETTER TO THE UNITHOLDERS

The Owner assumes all risks in connection with the adequacy of all insurance policies and all loss and damages in excess of the insurance coverage. The Hotel Manager shall be released from all claims and liabilities arising out of any damages or destruction of the New Hotels save for loss or damages caused by default, wilful misconduct, fraud, or negligence of the Hotel Manager or its associated companies.

3.6.10 Default and Termination

Upon the occurrence of certain events, a non-defaulting party may terminate the relevant New Hotel Management Agreement by giving three months’ written notice. Such events include: (i) failure of the Hotel Manager to operate the relevant New Hotel in accordance with the prescribed operating standards and the relevant Lessor elects to terminate the relevant New Lease Agreement on this ground; and (ii) failure to perform any other covenant which has a material adverse impact on the operation of the relevant New Hotel or the rights or duties of the parties under the relevant New Hotel Management Agreement and not cured within 30 days after a written notice giving particulars of the breach is received by the defaulting party.

Upon the occurrence of certain events, a non-defaulting party may terminate the relevant New Hotel Management Agreement immediately by serving a written notice of termination. Such events include: (i) failure by the Owner or the Hotel Manager to pay sums due for over 30 days; (ii) bankruptcy, insolvency, a petition for reorganization, appointment of a receiver or entering into of a judgment for bankruptcy against either the Owner or the Hotel Manager; (iii) any party to the relevant New Hotel Management Agreement ceasing to carry on business; and (iv) any change in the shareholding of the Hotel Manager which would result in the Hotel Manager ceasing to be a member of the Regal Hotels Group (unless as a result of reorganization of the Regal Hotels Group, a member of the Regal Hotels Group becomes listed on the Stock Exchange and the Hotel Manager becomes a member of a group controlled by such listed company and Regal Hotels retains not less than 30% of such listed company).

In addition, the Lessor is entitled to terminate the New Hotel Management Agreement if notice to terminate the relevant New Lease Agreement is served by the Lessor as a result of default by the Lessee thereunder, subject to liquidated damages being payable to the Hotel Manager in such circumstances. The amount of liquidated damages shall be the hotel management base fee and hotel management incentive fee payable for three Fiscal Years or the remainder of the operating term, whichever is shorter.

If the Hotel Manager fails to meet the Performance Test in any two consecutive Fiscal Years commencing from the first Fiscal Year, the Owner shall have the right to terminate the Hotel Management Agreement by giving at least three months’ written notice.

In assessing whether the Performance Test is achieved in a Fiscal Year, the threshold of 80% of the approved Gross Operating Profit shall be reduced proportionately by reference to the number of day(s) on which certain events occurred, and these include epidemics, pandemics or other infectious diseases, force majeure and the Owner itself being in default of material obligations. The Hotel Manager however has one chance to cure the non-performance by paying to the Owner an amount equal to the difference between: (a) the actual Gross Operating Profit of each of the two Fiscal Years; and (b) 80% of the Gross Operating Profit in the approved operating budgets for each of the corresponding Fiscal Years before the expiry of the three months’ notice period.

—54— LETTER TO THE UNITHOLDERS

3.6.11 Lessor’s Obligation to Maintain Hotel Licence and Other Licences

The Lessor is required to obtain, maintain and renew a licence under the Hotel and Guesthouse Accommodation Ordinance (Chapter 349 of the Laws of Hong Kong) and other licences to enable the Lessee or the Hotel Manager to operate a hotel business at the relevant New Hotel. However, the Lessor shall not be liable for any failure to obtain or renew such licences unless the failure is caused by the default of the Lessor. All costs and expenses in relation to obtaining, maintaining and renewing such licences shall be treated as Hotel Operating Expenses save and except any such costs and expenses which constitute Capital Additions shall be borne by the relevant Lessor and the Lessee in the manner agreed between them (save and except that any such costs and expenses required to conform with the legal requirements shall be borne by the Lessor). The Hotel Manager shall comply with all the conditions under the licence as may be imposed by the relevant licensing authority from time to time and shall keep the Lessor indemnified in respect of any breach of the conditions and associated liabilities caused by the default of the Hotel Manager.

4. FINANCING OF THE SW TRANSACTION AND THE NP TRANSACTION 1(d)

4.1 Total Consideration

The total consideration consists of: (a) the SW Hotel Purchase Price; and (b) the Final Exercise Price. Assuming: (a) the Final Exercise Price is equal to the Initial Exercise Price, the total consideration (for the avoidance of doubt, does not include the Current Assets Adjustments) is HK$3,230 million; and (b) the Final Exercise Price is equal to the Maximum Final Exercise Price, the total consideration is HK$3,405 million. The Maximum Total Consideration (which includes the maximum Current Assets Adjustments) is HK$3,408 million.

4.2 Financing of the SW Transaction and the NP Transaction

It is expected that the Deposit and the Refundable Cash Collateral will be financed by the proceeds of issuances of the March 2013 Notes and the May 2013 Notes; and the Option Fee will be financed by Regal REIT’s internal resources.

It is also expected that the remainder of the SW Hotel Purchase Price (i.e. excluding the Deposit), the Final Exercise Price, the Current Assets Adjustments, as well as the Manager Acquisition Fees, Trustee Additional Fees and Additional Costs for both the SW Transaction and the NP Transaction will be financed by: (i) proceeds of Notes issued pursuant to the Regal REIT MTN Programme; (ii) existing and/or new bank facilities secured against the Sheung Wan Hotel, the North Point Hotel and/or other assets held by Regal REIT; (iii) the Option Fee applied against part of the Final Exercise Price; (iv) the Refundable Cash Collateral refunded to Regal REIT at completion of the NP Transaction; and/or (v) Regal REIT’s internal resources.

The proportions of (i), (ii) and (v) will only be finally determined at the time of completion of the SW Transaction and the NP Transaction, respectively, depending on debt and capital market conditions at the time payments in respect of those transactions are made.

—55— LETTER TO THE UNITHOLDERS

In the event of any shortfall in funding required for completion of the SW Transaction or the NP Transaction, Regal REIT may also draw down on the Vendor Facility to fund the shortfall.

4.3 Regal REIT MTN Programme

On 11 January 2013, R-REIT International Finance Limited (the “MTN Issuer”), a wholly-owned subsidiary of Regal REIT, established a US$1 billion medium term note programme. The programme was listed on the Stock Exchange on 14 January 2013. Pursuant to the programme, the MTN Issuer may issue Notes by way of “debt issues to professional investors only” in accordance with Chapter 37 of the Listing Rules. Such investors will fall within the definition of “professional investors” under the SFO.

In March 2013, by way of private placements under the Regal REIT MTN Programme, the MTN Issuer issued an aggregate principal amount of HK$775 million unlisted and unsecured notes (the “March 2013 Notes”) due 2018 with an interest rate of 4.125% per annum. In May 2013, by way of syndicated placements under the Regal REIT MTN Programme, the MTN Issuer issued an aggregate principal amount of U.S.$150 million listed and unsecured notes (the “May 2013 Notes”) due 2018 with an interest rate of 4.10% per annum.

For further details relating to the Regal REIT MTN Programme, please refer to the announcements of Regal REIT dated 11 January 2013 and 22 May 2013 titled “Establishment and Proposed Listing of U.S.$1 billion Medium Term Note Programme” and “Issue and Proposed Listing of Notes under the U.S.$1 billion Medium Term Note Programme”, respectively.

4.4 Secured Bank Facilities

Regal REIT may rely upon existing and/or new bank facilities secured against the New Hotels or other assets held by Regal REIT, to fund part of the SW Hotel Purchase Price and/or the Final Exercise Price. Such facilities shall be at arms’ length, on normal commercial terms, fair and reasonable and in the interests of Unitholders. Regal REIT shall not draw down from such facilities if this would cause Regal REIT to breach the borrowing threshold (being 45%) permitted under paragraph 7.9 of the REIT Code.

As the bank facilities will be secured, they are expected to provide a relatively favourable finance cost compared to unsecured borrowings. The maximum loan-to-value ratio of any new bank facilities that Regal REIT may enter into is expected to be 40%.

4.5 Vendor Facility

On 28 June 2013, the Trustee (as borrower) entered into a Facility Letter in respect of the Vendor Facility with P&R Finance Limited (as lender), a wholly-owned subsidiary of P&R and a connected person of Regal REIT. In the event of any shortfall in the funding required for the completion of the SW Transaction and/or NP Transaction, Regal REIT may draw down on the Vendor Facility to fund the shortfall if the Manager considers that other financing options with terms and conditions to its satisfaction cannot be secured at the time of completion of the SW Transaction and the NP Transaction, respectively.

—56— LETTER TO THE UNITHOLDERS

The Vendor Facility relates to a Hong Kong dollar two-year unsecured standby loan facility of up to an aggregate principal amount of HK$1,457 million (which may be drawn down in two tranches), bearing an interest rate of 4.375% per annum, with such interest being payable quarterly. The Vendor Facility will mature and the outstanding principal amount will become repayable 24 months from the date on which the Trustee draws down on the Vendor Facility. There are no upfront costs relating to the Vendor Facility.

As the Vendor Facility provided under the Facility Letter is a connected party transaction for the reasons described in section 10.1 headed “Implications of the SW Transaction and the NP Transaction under the REIT Code and the Trust Deed — Share Purchase Agreement, Option Agreement, Deeds of Tax Indemnity, Interior Fit-Out Agency Deed and Facility Letter” to this Circular, drawdowns are conditional upon Unitholders approving the transactions contemplated under the Facility Letter and other transactions contemplated under, associated with and/or related to the Vendor Facility. As set out in sections 11.1, 11.2 and 11.3 respectively, the Directors, the Independent Board Committee and the Independent Financial Adviser consider that the Vendor Facility is: (i) at arm’s length on normal commercial terms, fair and reasonable, in the ordinary and usual course of business of Regal REIT, consistent with investment objectives and strategy of Regal REIT and in the interests of Independent Unitholders, as well as the Unitholders as a whole; and (ii) has an interest rate that is not higher than the prevailing commercial rate for unsecured term loans of a similar size and term.

5. FEES AND CHARGES IN RELATION TO THE SW TRANSACTION AND THE NP 2(f) TRANSACTION

5.1 Fees Payable to the Manager and the Trustee and the Additional Costs in relation to the SW Transaction and the NP Transaction

The expected acquisition fees payable to the Manager (the “Manager Acquisition Fee”) and the Trustee (the “Trustee Additional Fee”), as well as the additional costs (the “Additional Costs”) in relation to the SW Transaction and/or the NP Transaction, are set out below:

Assuming the Final Exercise Price is equal to the Initial Exercise Price:

Manager Trustee Additional Acquisition Fee(1) Fee (2) Additional Costs(3)

Completion of the SW HK$15,800,000 HK$50,000 HK$2,888,000 Transaction Completion of the NP HK$16,500,000 HK$50,000 HK$2,888,000 Transaction Total HK$32,300,000 HK$100,000 HK$5,776,000

—57— LETTER TO THE UNITHOLDERS

Assuming the Final Exercise Price is equal to the Maximum Final Exercise Price:

Manager Trustee Additional Acquisition Fee(1) Fee (2) Additional Costs(3)

Completion of the SW HK$15,800,000 HK$50,000 HK$2,888,000 Transaction Completion of the NP HK$18,250,000 HK$50,000 HK$2,888,000 Transaction

Total HK$34,050,000 HK$100,000 HK$5,776,000

Notes:

(1) Basis for calculation: 1% of the SW Hotel Purchase Price or the Final Exercise Price payable by the Trustee to P&R pursuant to the Share Purchase Agreement or the Option Agreement (as the case may be). For details of acquisition fee payable to the Manager, please refer to the section headed “Structure and Management — REIT Manager — Fees, Costs and Expenses of the REIT Manager” in the IPO Circular.

(2) Pursuant to clause 14.3.2 of the Trust Deed, the Trustee is entitled to an additional fee in relation to duties undertaken which are of an exceptional nature or otherwise outside the scope of the Trustee’s normal duties such as an acquisition or divestment by the Manager, subject to certain limits provided in the Trust Deed. The Trustee has agreed with the Manager that it will charge Regal REIT a one-time additional fee based on the time and costs incurred by it for duties undertaken by the Trustee in connection with the SW Transaction and NP Transaction, with such additional fee expected to be approximately HK$50,000 for each transaction.

(3) Other estimated fees and expenses (including stamp duty, advisory fees, professional fees and expenses) incurred or are expected to be incurred by Regal REIT in connection with completion of the SW Transaction and the NP Transaction.

5.2 Additional Ongoing Fees and Charges Following Completion of the SW Transaction and Completion of the NP Transaction

Following completion of the SW Transaction and the NP Transaction, in addition to the fees payable to the Manager and Trustee in respect of Regal REIT’s existing property portfolio:

(1) the Manager is entitled under the Trust Deed to receive management fees attributable to the New Hotels comprising (a) a base fee of 0.3% per annum, subject to a maximum cap of 0.5% per annum, of the value of the Deposited Property attributable to the New Hotels; and (b) a variable fee of 3% per annum, subject to a maximum cap of 5% per annum, of the net property income attributable to the New Hotels; and

(2) the Trustee is entitled under the Trust Deed to receive a fee based on a percentage of the value of the Deposited Property. The applicable fee percentage depends on the value of the Deposited Property. Based on the total value of the Deposited Property as at 31 December 2012, together with the SW Appraised Value and the NP Initial Appraised Value, the applicable fee percentage will be 0.0155% per annum, which may, with the approval of the Manager, be further increased to a maximum of 0.06% per annum.

—58— LETTER TO THE UNITHOLDERS

6. REASONS FOR, AND BENEFITS OF, THE SW TRANSACTION AND THE NP 2(i), note to 2(s) TRANSACTION

The Board (including all the Independent Non-executive Directors) believes that the SW Transaction and the NP Transaction will bring the following benefits to Unitholders:

(i) The Sheung Wan Hotel and the North Point Hotel will be operated under the “iclub by Regal (富薈酒店)” brand. For further information in respect of the “iclub by Regal (富薈酒店)” brand, refer to section 2.2.3 headed “The SW Transaction and the NP Transaction — Information on the New Hotels — iclub by Regal (富薈酒店)” in this Circular. It is the Manager’s view that operating the New Hotels (and the Wanchai Regal iClub Hotel) under the “iclub by Regal (富薈酒店)” brand will enhance the brand name of “iclub by Regal (富薈酒店)” and provide financial benefits for Regal REIT through economies of scale. For example, a cluster of “iclub by Regal (富薈酒店)” hotels can share the same management team and thereby reduce overheads and improve operating margins.

(ii) The investment in the New Hotels will increase the scale of Regal REIT. The SW Hotel 2(a) Purchase Price is HK$1,580 million and the Initial Exercise Price of the North Point Hotel Option is HK$1,650 million, and assuming the NP Updated Appraised Value remains unchanged, such investment would increase the appraised value of Regal REIT’s portfolio by approximately 15.4% (from HK$21,032 million as at 31 December 2012 to HK$24,262 million). Also, based on the specifications for the Sheung Wan Hotel and the North Point Hotel provided under the Share Purchase Agreement and the Option Agreement respectively, Regal REIT’s number of guestrooms would increase by 14.9% (from 3,929 guestrooms and suites as at 31 December 2012 to approximately 4,515 guestrooms and suites) and the gross floor area of Regal REIT’s property portfolio would increase by 6.5% (from approximately 216,412 sqm as at 31 December 2012 to approximately 230,458 sqm). Such increase in scale may broaden and enlarge Regal REIT’s income base, as well as further improve Regal REIT’s economies of scale (in a similar way to that described in (i) above). The addition of two new hotels to Regal REIT’s existing portfolio of six properties may also enhance Regal REIT’s market positioning and profile, and consequently, further improve Regal REIT’s attractiveness among a wider group of investors.

(iii) The Option Agreement provides Regal REIT with flexibility as the exercise price adjustment mechanism ensures that any such consideration will be at or below market valuation (as assessed by the Independent Property Valuer). On the other hand, as the Sheung Wan Hotel is at a later stage of development and expected to be completed more imminently in the fourth quarter of 2013, the Manager does not expect any material change to its value subsequent to 25 June 2013 (the date on which the Independent Property Valuer valued the Sheung Wan Hotel at HK$1,580 million), and accordingly, the Share Purchase Agreement does not contain a similar purchase price adjustment mechanism.

—59— LETTER TO THE UNITHOLDERS

rent for the first three years of each New Lease Agreement, being 5.00% (year 1), 5.25% (year 2) and 5.50% (year 3) of the SW Hotel Purchase Price (in respect of the New Lease Agreement relating to the Sheung Wan Hotel) or the Final Exercise Price (in respect of the New Lease Agreement relating to the North Point Hotel), is expected to contribute additional distributable income to the Unitholders during such period.

(v) The Deposit and the Refundable Cash Collateral will generate interest income for Regal REIT at a rate calculated at the higher of the following: (a) 4.25% per annum; and (b) the weighted average effective interest cost (taking into account the interest rate, issue price, placement fees and commissions) of the Notes issued to finance the payment of the Deposit and the Refundable Cash Collateral, thus resulting in a neutral or positive interest carry in respect of such funds once they are applied towards such purpose. The weighted average effective interest costs of the March 2013 Notes and May 2013 Notes is 4.3047% per annum. Assuming the Deposit and the Refundable Cash Collateral will be funded from the proceeds of the March 2013 Notes and May 2013 Notes, as is currently intended, the Deposit and the Refundable Cash Collateral will accrue interest at a rate of 4.3047% per annum. Otherwise, such cash proceeds may have to be placed on bank deposits earning a much lower rate of interest.

7. FINANCIAL EFFECTS OF THE SW TRANSACTION AND THE NP TRANSACTION ON 1(e) REGAL REIT

7.1 Impact of Completion of the SW Transaction and/or the NP Transaction on the Financial Position of Regal REIT

The following information is presented for illustrative purposes only and is based on the assumptions outlined below. The Manager considers these assumptions to be appropriate and reasonable as at the date of this Circular. However, Unitholders should consider the information outlined below in the light of such assumptions and make their own assessment of the future performance of Regal REIT.

Based on the pro forma financial effects of completion of the SW Transaction and/or completion of the NP Transaction as stated below and Appendix 3 headed “Pro Forma Financial Information of the Enlarged Group” to this Circular, the Manager does not foresee any material adverse impact on the financial position of Regal REIT as a result of completion of the SW Transaction and/or completion of the NP Transaction.

The pro forma financial effects of completion of the SW Transaction and/or completion of the NP Transaction presented below are strictly for illustrative purposes only and were prepared based on:

• the audited financial statements of Regal REIT for the year ended 31 December 2012; and

• the audited financial statements of the SW Target Company and the NP Target Company for the three years ended 31 December 2012 as set out in Appendix 2 headed “Accountants’ Reports in respect of the SW Target Company and the NP Target Company” to this Circular.

—60— LETTER TO THE UNITHOLDERS

7.2 Pro Forma Distributable Income

The pro forma financial effects of the SW Transaction and NP Transaction on the distributable income for the year ended 31 December 2012, as if Regal REIT had completed the SW Transaction and/or the NP Transaction on 1 January 2012 and based on the other assumptions below, are as follows:

Actual (audited) Pro Forma Pro Forma Pro Forma Enlarged Group after Regal REIT Enlarged Enlarged Completion of Group for the Group after Group after both the SW year ended Completion of Completion of Transaction 31 December the SW the NP and the NP 2012 Transaction Transaction Transaction (HK$’000) (HK$’000) (HK$’000) (HK$’000)

Profit for the year, before distributions to Unitholders 3,548,799 3,553,621 3,554,007 3,558,829 Adjustments(1) (3,084,141) (3,088,091) (3,088,266) (3,092,216) Distributable income 464,658 465,530 465,741 466,613 Units in issue 3,257,431,189 3,257,431,189 3,257,431,189 3,257,431,189

Distributable income per Unit HK$0.1426 HK$0.1429 HK$0.1430 HK$0.1432

Note:

1. The Adjustments reflect those adjustments to distributable income provided for in the Trust Deed. Further, the pro forma adjustments reflect the same items disclosed in Regal REIT’s distribution statement for the year ended 31 December 2012.

The following assumptions have been made in respect of the SW Transaction:

• Regal REIT acquired the Sheung Wan Hotel on 1 January 2012 for the SW Hotel Purchase Price and no Current Assets Adjustment was made;

• The New Lease Agreement in respect of the Sheung Wan Hotel commenced on 1 January 2012;

• The accounting rental income for the year ended 31 December 2012 (calculated as 5.25%, being the average annual rent payable during the first three years of the New Lease Agreement, of the SW Hotel Purchase Price) is HK$82.95 million;

• The cash rental income for the year ended 31 December 2012 (calculated as 5%, being the actual annual rent payable during such year, of the SW Hotel Purchase Price) is HK$79 million, resulting in an adjustment of HK$3.95 million;

—61— LETTER TO THE UNITHOLDERS

• The Manager Acquisition Fee, Trustee Additional Fee and Additional Costs for the SW Transaction were paid during 2012;

• The SW Hotel Purchase Price was funded entirely from debt while the Manager Acquisition Fee, Trustee Additional Fee and Additional Costs were funded entirely from Regal REIT’s internal resources; and

• The average effective interest cost of funding the SW Transaction is HK$47.4 million (being 3.0% per annum of the SW Hotel Purchase Price).

The following assumptions have been made in respect of the NP Transaction:

• Regal REIT acquired the North Point Hotel on 1 January 2012 for a Final Exercise Price of HK$1,650 million (representing no adjustment to the Initial Exercise Price) and no Current Assets Adjustment was made;

• The New Lease Agreement in respect of the North Point Hotel commenced on 1 January 2012;

• The cash rental income for the year ended 31 December 2012 (calculated as 5%, being the actual annual rent payable during such year, of the Final Exercise Price) is HK$82.5 million, resulting in an adjustment of HK$4.125 million;

• The Manager Acquisition Fee, Trustee Additional Fee and Additional Costs for the NP Transaction were paid during 2012;

• The Final Exercise Price was funded entirely from debt while the Manager Acquisition Fee, Trustee Additional Fee and Additional Costs were funded entirely by Regal REIT’s internal resources;

• The average effective interest cost of funding the NP Transaction is HK$49.5 million (being 3.0% per annum of the Final Exercise Price); and

• The Option Fee has not been accounted for in the pro forma since the Option Fee will be applied towards the Final Exercise Price at completion of the NP Transaction.

For further details regarding the calculation of the pro forma distributable income, please see Appendix 3 headed “Pro Forma Financial Information of the Enlarged Group” to this Circular.

—62— LETTER TO THE UNITHOLDERS

7.3 Pro Forma NAV per Unit

The pro forma financial effects of the SW Transaction and NP Transaction on the NAV per Unit for the year ended 31 December 2012, as if Regal REIT had completed the SW Transaction and/or the NP Transaction on 31 December 2012 and based on the other assumptions below, are as follows:

NAV 15,931,046 15,912,591 15,911,891 15,893,436 Units in issue 3,257,431,189 3,257,431,189 3,257,431,189 3,257,431,189

NAV per Unit attributable to Unitholders HK$4.891 HK$4.885(1) HK$4.885(1) HK$4.879(1)

Note:

1. The slight dilution in NAV is attributable to one-off costs associated with the SW Transaction and the NP Transaction, including the payment of the Manager Acquisition Fee, Trustee Additional Fee and Additional Costs.

The following assumptions have been made in respect of the SW Transaction and the NP Transaction:

• Regal REIT acquired the Sheung Wan Hotel and North Point Hotel on 31 December 2012 and no Current Assets Adjustments were made; and

• The fair values of the Sheung Wan Hotel and the North Point Hotel as at 31 December 2012 are HK$1,580 million (being the SW Appraised Value) and HK$1,650 million (being the NP Initial Appraised Value), respectively.

For further details regarding the calculation of the pro forma NAV per Unit, please see Appendix 3 headed “Pro Forma Financial Information of the Enlarged Group” to this Circular.

—63— LETTER TO THE UNITHOLDERS

7.4 Pro Forma Capitalisation

The pro forma financial effects of the SW Transaction and NP Transaction on the capitalisation of Regal REIT as at 31 December 2012, as if Regal REIT had completed the SW Transaction and/or the NP Transaction on 31 December 2012 and based on the other assumptions below, are as follows:

Total debt 4,834,600 6,356,065 6,426,065 8,006,065 Net assets attributable to Unitholders 15,931,046 15,912,591 15,911,891 15,893,436 Total capitalisation 20,765,646 22,268,656 22,337,956 23,899,501 Gearing ratio 22.9% 28.5% 28.8% 33.5%

The following assumptions have been made in respect of the SW Transaction and the NP Transaction:

• Regal REIT acquired: (a) the Sheung Wan Hotel on 31 December 2012 for the SW Hotel Purchase Price; and (b) the North Point Hotel on 31 December 2012 for a Final Exercise Price of HK$1,650 million (representing no adjustment to the Initial Exercise Price), and no Current Assets Adjustments were made;

• The Manager Acquisition Fee, the Trustee Additional Fee and Additional Costs (in the amount and as described in section 5.1 above) for the SW Transaction and NP Transaction were paid during 2012;

• The SW Hotel Purchase Price and the Final Exercise Price were funded entirely from debt while the Manager Acquisition Fee, Trustee Additional Fee and Additional Costs were funded entirely by Regal REIT’s internal resources;

• The Option Fee has not been accounted for in the pro forma since the Option Fee will be applied towards the Final Exercise Price at completion of the NP Transaction; and

—64— LETTER TO THE UNITHOLDERS

For further details regarding the calculation of the pro forma capitalisation of Regal REIT, please see Appendix 3 headed “Pro Forma Financial Information of the Enlarged Group” to this Circular.

7.5 Sensitivity of Pro Forma Profit for the year on the Enlarged Group for changes to the NP Updated Appraised value and average effective interest cost for financing the transaction(s)

The following tables set out the effect on pro forma profit for the year of the Enlarged Group for changes to the NP Updated Appraised Value and average effective interest cost for financing the transactions, assuming all other assumptions contained in the pro forma financial information statements remain the same except where consequential amendments are required.

Scenario A: Sensitivity of Pro Forma Profit for the year on the Enlarged Group after completion of the SW Transaction

Average Effective Pro forma Interest Cost Profit for the year(1) (HK$’000)

3.000% 4,949 3.500% (1,648) 4.000% (8,244) 4.338%(2) (12,635)

Notes:

(1) Figures in this table are based on the assumption that the average effective interest cost for the funding of the SW Hotel Purchase Price is calculated at various percentages as compared to the 3% per annum as assumed in the Pro Forma Financial Information of the Enlarged Group in Appendix 3 to this Circular.

(2) Assuming the Deposit is financed by the proceeds of issuances of the March 2013 Notes and the May 2013 Notes (which have a weighted average effective interest cost of 4.3047% per annum), and the remainder of the SW Hotel Purchase Price (i.e. excluding the Deposit) is financed by the Vendor Facility.

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Scenario B: Sensitivity of Pro Forma Profit for the year on the Enlarged Group after completion of the NP Transaction

Pro forma Profit for the year(1) Minimum Maximum Updated NP NP Initial Updated NP Appraised Value Appraised Value Appraised Value Average Effective (being HK$1,300 (being HK$1,650 (being HK$2,000 Interest Cost million)(2) million) million)(2) (HK$’000) (HK$’000) (HK$’000)

3.000% 3,601 5,285 5,662 3.500% (1,826) (1,603) (1,957) 4.000% (7,254) (8,492) (9,577) 4.338%(3) (10,866) (13,077) (14,648)

Notes:

(1) Figures in this table are based on the assumption that the average effective interest cost for the funding of the Final Exercise Price for the North Point Hotel Option is calculated at various percentages as compared to the 3% per annum as assumed in the Pro Forma Financial Information of the Enlarged Group in Appendix 3 to this Circular.

(2) The Minimum Updated NP Appraised Value and the Maximum Updated NP Appraised Value (with the Maximum Final Exercise Price of HK$1,825 million) are applied in conjunction with the various percentages of average effective interest cost.

(3) Assuming the Refundable Cash Collateral is financed by the proceeds of issuances of the March 2013 Notes and the May 2013 Notes (which have a weighted average effective interest cost of 4.3047% per annum), and the Final Exercise Price (other than the Refundable Cash Collateral) is financed by the Vendor Facility.

Scenario C: Sensitivity of Pro Forma Profit for the year on the Enlarged Group after completion of both the SW Transaction and the NP Transaction

3.000% 8,550 10,234 10,611 3.500% (3,474) (3,251) (3,605) 4.000% (15,498) (16,736) (17,821) 4.338%(3) (23,501) (25,712) (27,283)

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Notes:

(1) Figures in this table are based on the assumption that the average effective interest cost for the funding of both the SW Hotel Purchase Price and the Final Exercise Price is calculated at various percentages as compared to the 3% per annum as assumed in the Pro Forma Financial Information of the Enlarged Group in Appendix 3 to this Circular.

(3) Assuming the Deposit and the Refundable Cash Collateral are financed by the proceeds of issuances of the March 2013 Notes and the May 2013 Notes (which have a weighted average effective interest cost of 4.3047% per annum), and the remainder of the SW Hotel Purchase Price (i.e. excluding the Deposit) and the Final Exercise Price (other than the Refundable Cash Collateral) are financed by the Vendor Facility.

8. RISK FACTORS 2(e)

8.1 There are risks and uncertainties as the Sheung Wan Hotel and the North Point Hotel are currently under development

As the New Hotels are still currently being developed, there are certain risks involved including the following:

8.1.1 The completed New Hotels may be inconsistent with the specifications provided in the Share Purchase Agreement or the Option Agreement

The Share Purchase Agreement provides the specifications to which the Sheung Wan Hotel is to be developed, and the Option Agreement provides the specifications to which the North Point Hotel is to be developed. Both the Share Purchase Agreement and the Option Agreement provide protections for Regal REIT in relation to compliance with these specifications. Nevertheless, there are risks that the New Hotels, when completed, are not consistent with those specifications, which may materially affect the profitability of the New Hotels. It may not be possible to ratify the inconsistencies, or such ratification will incur significant additional costs. Such risks would not have arisen had the acquisition of the New Hotels been made after the development of the New Hotels has already been completed.

8.1.2 The due diligence survey on the New Hotels prior to completion of the SW Transaction or the NP Transaction may not have identified all material defects, breaches of laws and regulations and other deficiencies

As one of the conditions precedent to completion of the Share Purchase Agreement or the Option Agreement (as the case may be), the Manager would have to be satisfied with the physical and technical inspection and investigation of the relevant New Hotel. Nevertheless, there can be no assurance that such reviews, surveys or inspections (or the relevant review, survey or inspection reports on which Regal REIT or the Manager have relied upon to proceed to completion of the Share Purchase Agreement or the Option Agreement) would have revealed all defects or deficiencies affecting the relevant New Hotel.

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8.1.3 Regal REIT may not be able to enter into New Lease Agreements and New Hotel Management Agreements in the future on similar terms

Upon termination or expiration of a New Lease Agreement or a New Hotel Management Agreement, subject to market conditions, the Manager may not be able to substitute the Lessee or the Hotel Manager, as applicable, of the relevant New Hotel in a timely manner, or on terms similar to those under the New Lease Agreement or the New Hotel Management Agreement, as the case may be. During any period where there is no lessee or hotel manager in place, the Manager will have to directly operate the relevant hotel and Regal REIT will be directly exposed to the operating results of such hotel which would increase the volatility of Regal REIT’s operating results and, in turn, affect its ability to make stable distributions to Unitholders.

If the New Lease Agreements are no longer in place and the New Hotel Management Agreement is not terminated, the Hotel Manager will be entitled to a hotel management base fee of 2% of Gross Revenues (instead of 1%) and a hotel management incentive fee of 5% of the excess of Gross Operating Profit over the hotel management base fee and the Fixed Charges (instead of 1%) and the obligation to pay such fees will no longer be subordinated to the replacement lessee’s obligation to pay rent to Regal REIT, as more fully described in section 3.6.4 headed “Key Documentation — New Hotel Management Agreements — Hotel Management Fee”. The higher hotel management fees may impact on negotiations with potential lessees, which may have a negative effect on distributions to Unitholders.

8.2 Regal REIT is not fully insulated from the risks associated with the hotel industry despite the structure of the New Lease Agreements

Regal REIT (through the Lessor) will lease the New Hotels to the Lessee pursuant to the New Lease Agreements. However, the profitability of the New Hotels and the general economic outlook for the hotel industry in Hong Kong will affect: (i) the property values of the New Hotels and therefore the NAV per Unit; (ii) the rent Regal REIT is able to obtain for the New Hotels under the New Lease Agreements following market rental review by the independent professional property valuer; (iii) the Lessee’s ability to pay rent (other than Variable Rent); (iv) the Variable Rent that Regal REIT can expect to receive (if any); (v) the ability of Regal REIT to renew the New Lease Agreements on favourable terms following the expiry of the lease period; and (vi) the Manager’s ability to successfully pursue its long-term internal and external growth strategies.

The profitability of hotel business is cyclical and sensitive to changes in the global, regional or local economy generally. Since demand for hotel services in Hong Kong is affected by economic growth, a global, regional or local recession could lead to a downturn and any such downturn may affect business of the New Hotels. Other adverse factors outside the control of Regal REIT and the Hotel Manager could include political unrest, natural disasters, changes in law and other events (such as a slowdown in the growth of number of mainland Chinese visitor arrivals to Hong Kong pursuant to the PRC’s Individual Visit Scheme) which may impact negatively on the tourism industry and hotel business, including hotel bookings and food and beverage business at hotels in Hong Kong. The occurrence of one or more of these events may have an adverse effect on the operating performance of the New Hotels, the Lessee and, ultimately, Regal REIT.

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8.3 The Manager’s ability to effectively monitor the obligations of the Hotel Manager under the New Hotel Management Agreements and to actively manage the New Hotels is limited

While the Manager believes that the New Lease Agreements and the New Hotel Management Agreements contain suitable provisions to ensure that the New Hotels are adequately maintained and that the Lessee and the Hotel Manager are motivated to enhance the quality and value of the New Hotels, the Manager’s ability to actively manage the New Hotels is limited by the provisions of the New Lease Agreements and the New Hotel Management Agreements. Under the terms of the New Lease Agreements, the Lessee shall manage and operate (or procure the Hotel Manager to manage and operate) the New Hotels and under the New Hotel Management Agreements, the Hotel Manager will have full control and discretion in the management, operation and promotion of the New Hotels, subject to certain matters requiring the approval of Regal REIT.

8.4 The Interior Fit-Out Programmes involves fit-out work and may not be completed on schedule

Although P&R has undertaken to complete, at its own cost (including any cost overruns), the Interior Fit-Out Programmes pursuant to the Share Purchase Agreement and Option Agreement, the Interior Fit-Out Programmes may not be completed on schedule, due to reasons outside the control of P&R. The SW Appraised Value, NP Initial Appraised Value and NP Updated Appraised Value represent the value of the New Hotels as if the relevant Interior Fit-Out Programme has already been completed. The Share Purchase Agreement and Option Agreement confer various rights on the Manager and the Trustee in the event that the relevant Interior Fit-Out Programme is not completed in accordance with terms set out therein. However, in such circumstances, the operation of the New Hotels may be delayed or disrupted. Although Regal REIT will receive income pursuant to the New Lease Agreements irrespective of whether the New Hotels have commenced operations, such delay may extend the initial start-up risk phase of the New Hotels.

8.5 The New Hotels have no operating history. Unitholders and prospective investors should be aware that there may be an initial start-up risk associated with each of the New Hotels

The New Hotels are newly developed and have no operating history. There can be no assurance with respect to Regal REIT’s performance with the New Hotels becoming part of its portfolio. Accordingly, investors should be aware that there may be an initial start-up risk associated with each of the New Hotels. Such risks relating to the profitability may affect the property values of the New Hotels and therefore the NAV per Unit.

8.6 There are risks to leveraging and limitations on Regal REIT’s ability to leverage

Regal REIT is expected to use leverage in connection with the SW Transaction and the NP Transaction and its other investments. In addition, Regal REIT may, from time to time, require additional debt financing to fund working capital requirements, to support the future growth of

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its business and/or to refinance existing debt obligations. Borrowings by Regal REIT are limited by the REIT Code to no more than 45% (or such other limit as may be stipulated under the REIT Code or as may be specifically permitted by the SFC) of the total gross asset value of the Deposited Property as set out in Regal REIT’s latest published accounts immediately prior to such borrowing being effected, subject to certain adjustments. If the 45% borrowing limit is exceeded, the Manager shall use its best endeavours to reduce the excess borrowings while not incurring further borrowings. Where the interests of the Unitholders will not be prejudiced, the Manager may dispose of Regal REIT’s assets in order to pay off part of the borrowings unless the overshooting of the borrowing limit results from a decrease in the market value of the assets. If a downward revaluation of any of the New Hotels occurs in the future, Regal REIT may exceed the 45% borrowing limit even without incurring any additional borrowing. Therefore, there can be no assurance that Regal REIT’s borrowings will remain at all times below the 45% borrowing limit, following any revaluation of assets or otherwise. From time to time, Regal REIT may need to draw down on its banking facilities and use overdrafts, but may be unable to do so due to the 45% borrowing limit prescribed by the REIT Code.

Further, the equity or debt financing to be provided to Regal REIT may be on terms that are not favourable to Regal REIT. The availability of borrowings and access to the capital markets for financing depends on prevailing market conditions and the acceptability of the financing terms offered. Regal REIT’s ability to arrange for external financing and the cost of such financing depends on numerous factors, including general economic and capital market conditions, interest rates, credit availability from banks or other lenders, investor confidence in Regal REIT and success of Regal REIT’s business.

8.7 Failure by P&R, the Guarantors and/or other counterparties to fulfill their obligations under the SW Transaction Documents and/or the NP Transaction Documents, such as any failure to refund the Deposit and Refundable Cash Collateral which are not held in escrow, may have a material adverse effect on Regal REIT’s operations

Under the SW Transaction Documents and the NP Transaction Documents, P&R, the Guarantors and/or other counterparites have made (or will make) several commitments in favour of Regal REIT, including but not limited to the refund of the Deposit and/or Refundable Cash Collateral (and any interest accrued and unpaid), which are not held in escrow, in the circumstances described in sections 3.1.3 and 3.2.4 above, respectively. Failure by such parties to fulfill any of the obligations in the SW Transaction Documents and/or the NP Transaction Documents may have a material adverse effect on Regal REIT’s operations.

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9. CONTINUING CONNECTED TRANSACTIONS

9.1 Connected Persons of Regal REIT

The Regal REIT Group will enter into continuing transactions (which will constitute continuing connected transactions of Regal REIT within the meaning of the REIT Code) with the following connected persons:

(i) Regal Connected Persons Group

For the purpose of the REIT Code, Regal Hotels is a Significant Holder (that is, a holder of 10% or more of the outstanding Units) of Regal REIT, and is therefore a connected person of Regal REIT under paragraph 8.1(d) of the REIT Code. Any person who is connected to Regal REIT under paragraph 8.1(d) of the REIT Code, and any person who is connected to Regal Hotels as described in paragraphs 8.1(e), (f) or (g) of the REIT Code is also a connected person of Regal REIT, and these persons include: (i) any director, senior executive or officer of Regal Hotels; (ii) any associate (as defined in the REIT Code) of Regal Hotels or of any director, senior executive or officer of Regal Hotels; and (iii) any controlling entity, holding company, subsidiary or associated company (as defined in the REIT Code) of Regal Hotels (the “Regal Connected Persons Group”).

(ii) Manager Group

The Manager is a connected person of Regal REIT under paragraph 8.1(a) of the REIT Code. Any person who is connected to the Manager as described in paragraphs 8.1(e), (f) or (g) of the REIT Code is also a connected person of Regal REIT, and these persons include: (i) any director, senior executive or officer of the Manager; (ii) any associate (as defined in the REIT Code) of any director, senior executive or officer of the Manager; and (iii) any controlling entity, holding company, subsidiary or associated company (as defined in the REIT Code) of the Manager (collectively, and together with the Manager, the “Manager Group”).

9.2 New CCT Waiver Application

Upon and after completion of the SW Transaction and (assuming the North Point Hotel Option has been exercised) the NP Transaction, members of the Regal REIT Group will enter into transactions with members of the Regal Connected Persons Group in relation to the New Lease Agreement, the New Lease Guarantee and the New Hotel Management Agreement in respect of the Sheung Wan Hotel (the “Additional SW Hotel CCTs”) and the New Lease Agreement, the New Lease Guarantee and the New Hotel Management Agreement in respect of the North Point Hotel (the “Additional NP Hotel CCTs” and together with the Additional SW Hotel CCTs, the “Additional Continuing Connected Transactions”).

Accordingly, the Manager has requested that the SFC grant a waiver (the “New CCT Waiver Application”) from strict compliance with the disclosure and unitholders’ approvals requirements under Chapter 8 of the REIT Code in respect of the Additional Continuing Connected Transactions. Further details regarding the Additional Continuing Connected Transactions are described below.

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(i) New Lease Agreements

Commencement Hotel Lessor Lessee Date Term

Sheung Wan SW Property Favour Link Date of From the Commencement Hotel Company International completion of Date and ending on the 31 Limited the SW December immediately Transaction following the fifth anniversary, and may be extended for a further 5 years at the Lessor’s sole discretion

North Point NP Property Favour Link Date of From the Commencement Hotel Company International completion of Date and ending on the 31 Limited the NP December immediately Transaction following the fifth anniversary, and may be extended for a further 5 years at the Lessor’s sole discretion

Further details of the New Lease Agreements are set out in section 3.5 headed “Key Documentation — New Lease Agreements and New Lease Guarantees”.

(ii) New Hotel Management Agreements

The Lessee, the relevant Lessor, Regal Hotels and the Hotel Manager, will enter into a New Hotel Management Agreement concurrently with the signing of the relevant New Lease Agreement. The Hotel Manager will be engaged to act as the exclusive operator and manager of the relevant New Hotel to supervise, direct and control the management, operation and promotion of the business of the relevant New Hotel during the operating term of the relevant New Hotel Management Agreement. The Hotel Manager and the Lessee are members of the Regal Connected Persons Group, and accordingly, the New Hotel

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Management Agreements are connected transactions pursuant to Chapter 8 of the REIT Code. Certain key information regarding the New Hotel Management Agreements is summarised in the table below:

Hotel Commencement Date Term

Sheung Wan Hotel Date of completion of the SW 10 years from the Transaction Commencement Date

North Point Hotel Date of completion of the NP 10 years from the Transaction Commencement Date

Further details of the New Hotel Management Agreements are set out in section 3.6 headed “Key Documentation — New Hotel Management Agreements”.

(iii) New Lease Guarantees

Regal Hotels will, at the same time as entering into the New Lease Agreements, enter into a lease guarantee pursuant to which Regal Hotels will guarantee: (a) the Lessee’s obligations to pay all amounts owing under such New Lease Agreement; and (b) the due observance and performance of such New Lease Agreement by the Lessee. The New Lease Guarantees also contain an indemnity in respect of all guaranteed liabilities. Regal Hotels is a member of the Regal Connected Persons Group, and accordingly, the New Lease Guarantees are connected transactions pursuant to Chapter 8 of the REIT Code.

Further details of the New Lease Guarantees are set out in section 3.5.6 headed “Key Documentation — New Lease Agreements and New Lease Guarantees — Lease Guarantees”.

9.3 Waiver Conditions

(i) Period of Waiver

The New CCT Waiver Application applied for is in respect of the periods set out in the table below, provided that the Additional Continuing Connected Transactions are duly and properly carried out in accordance with the terms and conditions of the relevant documents.

Agreement Period of Waiver

New Lease Agreements

- in respect of the From the date of the New Lease Agreement in respect of the Sheung Wan Hotel Sheung Wan Hotel and ending on the 31 December immediately following the fifth anniversary (and an additional five years if the original lease term is extended for a further five years) or date of termination, whichever is earlier

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- in respect of the From the date of the New Lease Agreement in respect of the North Point Hotel North Point Hotel and ending on the 31 December immediately following the fifth anniversary (and an additional five years if the original lease term is extended for a further five years) or date of termination, whichever is earlier

New Hotel Management Agreements

- in respect of the 10 years from the date of the New Hotel Management Sheung Wan Hotel Agreement in respect of the Sheung Wan Hotel or date of early termination, whichever is earlier

- in respect of the 10 years from the date of the New Hotel Management North Point Hotel Agreement in respect of the North Point Hotel or date of early termination, whichever is earlier

New Lease Guarantees

- in respect of the From the date of the New Lease Guarantee in respect of the Sheung Wan Hotel Sheung Wan Hotel to the last date of subsistence

- in respect of the From the date of the New Lease Guarantee in respect of the North Point Hotel North Point Hotel to the last date of subsistence

(ii) Timing

The New CCT Waiver Application, insofar as it applies to the Additional SW Hotel CCTs, will only take effect once: (i) the Additional SW Hotel CCTs have been entered into; and (ii) the SW Transaction and the New CCT Waiver Application have been approved by the Independent Unitholders at the EGM by way of an Ordinary Resolution.

The New CCT Waiver Application, insofar as it applies to the Additional NP Hotel CCTs, will only take effect once: (i) the Additional NP Hotel CCTs have been entered into; and (ii) the NP Transaction and the New CCT Waiver Application have been approved by the Independent Unitholders at the EGM by way of an Ordinary Resolution.

(iii) No Material Change

There shall be no material change to, or waiver or release by or on behalf of Regal REIT of any of its rights and any obligations of the relevant connected persons of Regal REIT under the terms and conditions of the Additional Continuing Connected Transactions, without the approval of Unitholders (other than those Unitholders who have a material interest in the relevant transactions within the meaning of paragraph 8.11 of the REIT Code) by way of an Ordinary Resolution.

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(iv) Disclosure in Reports and Results Announcements

Details of the Additional Continuing Connected Transactions will be disclosed in Regal REIT’s semi-annual and annual reports and results announcements, as required under paragraph 8.14 of the REIT Code.

(v) Chapter 10 of the REIT Code

The Manager shall ensure compliance with any applicable disclosure requirements under Chapter 10 of the REIT Code. The Manager shall inform Unitholders by way of an announcement as soon as practicable of any information which is necessary to enable Unitholders to appraise the position of Regal REIT, including, without limitation, if there is: (i) any extension of the relevant completion date or long stop date or any delay in payment of damages or compensation as specified in the Additional Continuing Connected Transactions; (ii) any payments under the New Lease Guarantees; (iii) any payment of hotel management fees (where paid by Regal REIT to the Hotel Manager); (iv) rent reviews under the New Lease Agreements and details of the market rental packages determined by the jointly appointed independent professional property valuer for each Lease Year; and (v) any breach of terms of any of the Additional Continuing Connected Transactions.

(vi) Auditors’ review procedures

The Manager shall engage and agree with the auditors of Regal REIT to perform certain review procedures on all of the Additional Continuing Connected Transactions in respect of each relevant financial period. The auditors will then report to the Manager on the factual findings based on the work performed by them (and a copy of such report will be provided to the SFC), confirming whether all such Additional Continuing Connected Transactions:

(a) have received the approval of the Board (including the approval of all its independent non-executive Directors); and

(b) have been entered into in accordance with the terms of the agreements and the Manager’s internal procedures governing the transactions.

(vii) Review by the Independent Non-executive Directors

The independent non-executive Directors shall review the Additional Continuing Connected Transactions annually and confirm in Regal REIT’s annual report for the relevant financial period that such transactions have been entered into:

(a) in the ordinary and usual course of business of Regal REIT;

(b) on normal commercial terms (to the extent that there are comparable transactions) or, where there are insufficient comparable transactions to assess whether they are on normal commercial terms, on terms no less favourable to Regal REIT than terms available to or from (as appropriate) independent third parties; and

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(c) in accordance with the relevant agreements and the Manager’s internal procedures governing them (if any) on terms that are fair and reasonable and in the interests of the Unitholders as a whole.

(viii)Access to books and records

The Manager shall allow, and shall procure the counterparty to the relevant Additional Continuing Connected Transactions to allow, the auditors of Regal REIT sufficient access to their respective records for the purpose of reporting on the transactions.

(ix) Notification to the SFC

The Manager shall promptly notify the SFC and publish an announcement if it knows or has reason to believe that the auditors and/or the independent non-executive Directors will not be able to confirm the matters set out in (vi) and/or (vii) above.

(x) Paragraph 8.14 of the REIT Code

The Manager shall comply in full with the requirements of paragraph 8.14 of the REIT Code where there is any material change to the terms of any Additional Continuing Connected Transactions or where there is any subsequent change to the REIT Code which may impose stricter requirements in respect of disclosure and/or unitholders’ approvals.

9.4 Opinion of the Board

The board of directors of the Manager (including all the Independent Non-executive Directors except where they are considered to be interested in the below) confirms that in its opinion:

(i) the New CCT Waiver Application, and the basis for the New CCT Waiver Application, is fair and reasonable having regard to the interests of the Independent Unitholders, as well as the Unitholders as a whole; and

(ii) each of the Additional Continuing Connected Transactions to be entered into upon and after completion of the SW Transaction and/or the NP Transaction shall be: (1) in the ordinary and usual course of business of Regal REIT; and (2) on terms which are normal commercial terms, at arm’s length and are fair and reasonable and in the interests of the Independent Unitholders, as well as the Unitholders as a whole.

9.5 Opinion of the Independent Financial Adviser

Somerley Limited appointed by the Manager as the Independent Financial Adviser, has confirmed that, it is of the view that:

(i) the New CCT Waiver Application, and the basis for the New CCT Waiver Application, are fair and reasonable having regard to the interests of the Independent Unitholders, as well as the Unitholders as a whole; and

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(ii) each of the Additional Continuing Connected Transactions to be entered into upon and after completion of the SW Transaction and/or the NP Transaction shall be: (1) in the ordinary and usual course of business of Regal REIT; (2) on terms which are normal commercial terms, at arm’s length and are fair and reasonable and in the interests of the Independent Unitholders, as well as the Unitholders as a whole.

Details of the Independent Financial Adviser’s opinion, together with the principal factors taken into consideration, and assumptions and qualifications in arriving at such opinion, are set out in the “Letter from the Independent Financial Adviser” in this Circular.

9.6 Opinion of the Independent Board Committee

The Independent Board Committee has been established by the Board to advise the Independent Unitholders on the Transaction Matters Requiring Approval, which includes the New CCT Waiver Application. Somerley Limited has been appointed as the Independent Financial Adviser to provide its opinion on the Transaction Matters Requiring Approval, including the New CCT Waiver Application, to the Independent Board Committee (as well as the Independent Unitholders and the Trustee).

Having taken into account the opinion of and reasons considered by the Independent Financial Adviser, the Independent Board Committee considers that:

9.7 Opinion of the Independent Property Valuer

Savills Valuation and Professional Services Limited appointed by the Manager and the Trustee as the Independent Property Valuer, has confirmed that, in its opinion, the New Lease Agreements and New Hotel Management Agreements associated with the SW Transaction and the NP Transaction (including their respective duration, the rents payable under the New Lease Agreements, the requirements regarding security deposits, termination provisions and other terms and conditions therein) are on normal commercial terms and consistent with normal business practice for contracts of the relevant type and at the prevailing market level, except for: (i) the rents payable for the first three Lease Years which are above market level; and (ii) the hotel management fees, for so long as the New Lease Agreements are in subsistence, which are below market level.

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10. IMPLICATIONS OF THE SW TRANSACTION AND THE NP TRANSACTION UNDER THE REIT CODE AND THE TRUST DEED

10.1 Share Purchase Agreement, Option Agreement, Deeds of Tax Indemnity, Interior Fit-Out noteto2(s) Agency Deeds and Facility Letter

Each of Paliburg and Regal Hotels has an effective interest in more than 10% of the Units and therefore is a Significant Holder of Regal REIT. Each of P&R and P&R Finance Limited is an “associated company” of both Paliburg and Regal Hotels within the meaning of the REIT Code. As a result, Paliburg, Regal Hotels, P&R and P&R Finance Limited are each a connected person of Regal REIT within the meaning of the REIT Code. Accordingly, each of the following constitutes a connected transaction of Regal REIT under paragraph 8.5 of the REIT Code:

(a) the execution of the Share Purchase Agreement and the consummation of the transactions contemplated thereunder;

(b) the execution of the Deed of Tax Indemnity in respect of the Sheung Wan Hotel and the consummation of the transactions thereunder;

(c) the execution of the Interior Fit-Out Agency Deed in respect of the Sheung Wan Hotel and the consummation of the transactions thereunder;

(d) the execution of the Option Agreement and the consummation of the transactions contemplated thereunder;

(e) the execution of the Deed of Tax Indemnity in respect of the North Point Hotel and the consummation of the transactions thereunder;

(f) the execution of the Interior Fit-Out Agency Deed in respect of the North Point Hotel and the consummation of the transactions thereunder; and

(g) the execution of the Facility Letter and the consummation of the transactions contemplated thereunder and other transactions contemplated under, associated with/or related to the Vendor Facility.

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disclosed in its latest published audited accounts, and adjusted for any subsequent transaction since their publication), pursuant to paragraph 8.11 of the REIT Code and clause 15.1 of the Trust Deed, the connected transactions in paragraphs (a) to (g) above require Independent Unitholders’ approval by way of Ordinary Resolutions at the EGM.

In addition, as the Maximum Total Consideration represents 44.71% of the total market capitalisation of Regal REIT, based on the average closing price of the Units traded on the Stock Exchange for the last five Business Days immediately preceding the Latest Practicable Date, the SW Transaction and the NP Transaction together constitute a major transaction for Regal REIT pursuant to the REIT Code.

10.2 The New CCT Waiver Application

The Manager has requested that the SFC grant the New CCT Waiver Application. For further details, please refer to section 9.2 above headed “Continuing Connected Transactions — New CCT Waiver Application”.

The Manager will seek approval of the Independent Unitholders at the EGM on the New CCT Waiver Application and the agreements pertaining thereto (being the New Lease Agreements, New Lease Guarantees and New Hotel Management Agreements).

10.3 Ordinary Resolutions 1(n)

The Manager takes the view that: (a) the SW Transaction, the Vendor Facility and the New CCT Waiver Application are linked to each other and part and parcel of a significant proposal; and (b) the NP Transaction, the Vendor Facility and the New CCT Waiver Application are linked to each other and part and parcel of another significant proposal. The Vendor Facility and the New CCT Waiver Application (as the case may be) only arise from the consummation of the transactions contemplated under the SW Transaction and/or NP Transaction (as the case may be) and will not be required but for the entering into of the agreements underlying the SW Transaction and/or NP Transaction (as the case may be). Accordingly, the SW Transaction and/or the NP Transaction (as the case may be) will not proceed if the Vendor Facility and the New CCT Waiver Application (as the case may be) have not been approved by the Unitholders at the EGM.

Completion of each of the SW Transaction and the NP Transaction is not conditional upon one another having been approved by the Independent Unitholders at the EGM. Also, the Manager may proceed with either of the SW Transaction or the NP Transaction if the relevant conditions precedent of the NP Transaction or the SW Transaction (as the case may be) have not been satisfied or (if applicable) waived.

Please refer to the EGM Notice for the proposed resolutions in relation to the SW Transaction, the NP Transaction, the Vendor Facility and the New CCT Waiver Application. As soon as practicable after the EGM, the Manager will issue an announcement setting out the results of the EGM, including whether the proposed resolutions have been passed.

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10.4 Restrictions on Voting 1(n)

Paragraph 9.9(f) of the REIT Code provides that where a Unitholder has a material interest in the resolution tabled for approval, and that interest is different from that of all other Unitholders, such Unitholder shall abstain from voting.

Further, under paragraph 3.2 of Schedule 2 to the Trust Deed, where a Unitholder has a material interest in the resolution tabled for approval at a general meeting of the Unitholders, and that interest is different from the interests of other Unitholders, such Unitholder shall be prohibited from voting its Units or being counted in the quorum for the general meeting.

Members of the Regal Connected Persons Group (defined in section 9.1 of this Circular) are parties to the SW Transaction and the NP Transaction, and as such, have a material interest in the relevant resolutions to be proposed at the EGM and have to abstain from voting on the EGM Resolutions.

Pursuant to the REIT Code and the Trust Deed, Regal Hotels has agreed that it will abstain, and will procure that its Associates will abstain, from voting on the EGM Resolutions.

To the best of the Manager’s knowledge, information and belief, after having made reasonable enquiries, the Manager takes the view that save as disclosed above, no other Unitholders are required to abstain from voting at the EGM in respect of the EGM Resolutions and based on the foregoing information, the Trustee is of the same view.

10.5 Manager Has Discretion

Given the acquisition of the relevant New Hotel is dependent on the satisfaction of certain conditions, for the avoidance of doubt, Unitholders should note that the Trustee may not proceed with the relevant acquisition if any of the conditions shall not have been fulfilled (or waived) prior to the relevant Long Stop Date. In addition, the Manager has the sole discretion as to whether to exercise the North Point Hotel Option during the option exercise period.

10.6 Waiver Application and Submissions Made to the SFC

10.6.1 Application for the New CCT Waiver Application in respect of Chapter 8 of the REIT Code

The Manager has requested that the SFC grant the New CCT Waiver Application to Regal REIT from strict compliance with the disclosure and unitholders’ approval requirements under Chapter 8 of the REIT Code, in respect of the Additional Continuing Connected Transactions, subject to and conditional upon, among other things, the approval of the SFC and the Independent Unitholders (by way of Ordinary Resolution) and completion of the SW Transaction and/or the NP Transaction. For further details, please refer to section 9 above.

—80— LETTER TO THE UNITHOLDERS

10.6.2 Submission for More Than Two layers of Special Purpose Vehicles in respect of the New Hotels

For facilitating future group re-organisation and disposal of property interests through an intermediate holding company to achieve savings in transaction costs, a submission has been made to the SFC for the use of more than two layers of special purpose vehicles by Regal REIT in respect of each the Sheung Wan Hotel and North Point Hotel and this has been allowed by the SFC, subject to the condition that there will be no change to the maximum number of layers of special purpose vehicles used by Regal REIT without further approval from the SFC.

10.7 Acquisition of Uncompleted Units in a Building with a Value not exceeding 10% of NAV

Paragraph 7.1 of the REIT Code provides that a real estate investment trust shall only invest in real estate. Under Note (2) to paragraph 7.1 of the REIT Code, a REIT may acquire uncompleted units in a building which is unoccupied and non-income producing or in the course of substantial development, redevelopment or refurbishment, but the aggregate contract value of such real estate shall not exceed 10% of the total net asset value of the real estate investment trust at the time of acquisition (the “Uncompleted Units Exemption”).

Based on Regal REIT’s latest audited financial statements, the net asset value of Regal REIT as at 31 December 2012 was approximately HK$15,931 million. Accordingly, the Manager considers that although the Sheung Wan Hotel is in the course of substantial development, the SW Transaction is permitted under the REIT Code as the Maximum Adjusted SW Hotel Purchase Price (being HK$1,581.5 million) falls within the Uncompleted Units Exemption.

10.8 Grant of Option

The Manager considers that Regal REIT should not be taken to have invested in the North Point Hotel until the Manager exercises the North Point Hotel Option, as until such time, the Manager has the discretion to let the North Point Hotel Option lapse (in which case, the Refundable Cash Collateral together with accrued interest will be refunded to Regal REIT).

At the time that the Manager exercises the North Point Hotel Option: (i) the development phase of the North Point Hotel will have been completed (as evidenced by the occupation permit triggering the option exercise period); and (ii) the North Point Hotel will enjoy a stable stream of income upon completion of the acquisition (as the New Lease Agreement in respect of the North Point Hotel will be entered into concurrently with completion of the NP Transaction).

Accordingly, at the time that Regal REIT invests in the North Point Hotel, the North Point Hotel shall comply with the investment criteria set out in paragraphs 7.1 and 7.2 of the REIT Code. As such criteria are satisfied, Regal REIT will not need to rely on Note (2) to paragraph 7.1 of the REIT Code.

—81— LETTER TO THE UNITHOLDERS

11. RECOMMENDATIONS

11.1 The Board 2(i), noteto2(s)

Having regard to the reasons for, terms of, and factors and other information taken into consideration in relation to, the Transaction Matters Requiring Approval and the Additional Continuing Connected Transactions as described in this Circular, the Board (including all the Independent Non-executive Directors except where they are considered to be interested in the below) consider that:

(1) the SW Transaction is being entered into in the ordinary and usual course of business of Regal REIT and is consistent with the investment objectives and strategy of Regal REIT and is at arm’s length on normal commercial terms, which are fair and reasonable and in the interests of Independent Unitholders, as well as the Unitholders as a whole;

(2) the NP Transaction is being entered into in the ordinary and usual course of business of Regal REIT and is consistent with the investment objectives and strategy of Regal REIT and is at arm’s length on normal commercial terms, which are fair and reasonable and in the interests of Independent Unitholders, as well as the Unitholders as a whole;

(3) the Vendor Facility: (i) is at arm’s length on normal commercial terms, fair and reasonable, in the ordinary and usual course of business of Regal REIT, consistent with the investment objectives and strategy of Regal REIT and in the interests of Independent Unitholders, as well as the Unitholders as a whole; and (ii) has an interest rate that is not higher than the prevailing commercial rate for unsecured term loans of a similar size and term; and

(4) the New CCT Waiver Application is fair and reasonable having regard to the interests of Regal REIT, the Independent Unitholders, as well as the Unitholders as a whole; and the Additional Continuing Connected Transactions are: (i) being entered into in the ordinary and usual course of business of Regal REIT; (ii) consistent with the investment objectives and strategy of Regal REIT; and (iii) on terms which are normal commercial terms at arm’s length and are fair and reasonable and in, and not prejudicial to, the interests of Regal REIT, the Independent Unitholders, as well as the Unitholders as a whole,

and accordingly, recommend that the Independent Unitholders vote at the EGM in favour of the EGM Resolutions.

11.2 Independent Board Committee

The Independent Board Committee (which comprises three of the Independent Non-executive Directors of the Manager) has been established by the Board to advise the Independent Unitholders on whether the Transaction Matters Requiring Approval are fair and reasonable. The Independent Financial Adviser has been appointed by the Manager to advise the Independent Board Committee, the Independent Unitholders and the Trustee as to whether the Transaction Matters Requiring Approval are fair and reasonable.

—82— LETTER TO THE UNITHOLDERS

Your attention is drawn to the “Letter from the Independent Board Committee” set out in this Circular, which contains the Independent Board Committee’s recommendations to the Independent Unitholders, and the “Letter from the Independent Financial Adviser” set out in this Circular, which contains among other things: (1) the Independent Financial Adviser’s advice to the Independent Board Committee, the Independent Unitholders and the Trustee; and (2) the principal factors taken into consideration by the Independent Financial Adviser, and assumptions and qualifications adopted by the Independent Financial Adviser in arriving at such opinion.

The Independent Board Committee recommends that the Independent Unitholders vote at the EGM in favour of the EGM Resolutions.

11.3 Independent Financial Adviser

Somerley Limited has been appointed as the independent financial adviser for the purposes of paragraph 10.10(p) of the REIT Code to advise the Independent Board Committee, the Independent Unitholders and the Trustee as to whether the Transaction Matters Requiring Approval are fair and reasonable. In this regard, the Independent Financial Adviser considers that:

and accordingly, recommends that the Independent Unitholders vote at the EGM in favour of the EGM Resolutions.

—83— LETTER TO THE UNITHOLDERS

11.4 Trustee

The Independent Financial Adviser has been appointed by the Manager to advise the Independent Board Committee, the Independent Unitholders and the Trustee as to whether the Transaction Matters Requiring Approval are fair and reasonable. Details of its opinion, together with the principal factors taken into consideration, and assumptions and qualifications in arriving at such opinion, are set out in the “Letter from the Independent Financial Adviser” in this Circular. Savills Valuation and Professional Services Limited has been appointed by the Manager and the Trustee to value the New Hotels. Its opinion is set out in Appendix 4 headed “Independent Property Valuer’s Valuation Reports” to this Circular. Further, the Independent Board Committee has been appointed to advise the Independent Unitholders in respect of the Transaction Matters Requiring Approval and its advice is set out in the “Letter from the Independent Board Committee” in this Circular.

Based and in sole reliance on: (1) the opinion of the Board in this letter and the information and assurances provided by the Manager; (2) the Letter from the Independent Financial Adviser; (3) the Letter from the Independent Board Committee; and (4) the Independent Property Valuer’s Valuation Reports, the Trustee, having taken into account its duties set out in the Trust Deed and the REIT Code, (i)(a) is of the view that the Transaction Matters Requiring Approval, are fair and reasonable and in the interests of Independent Unitholders, as well as the Unitholders as a whole, and are not prejudicial to such interests (b) the SW Transaction and the NP Transaction are consistent with Regal REIT’s established investment objectives and strategy and (ii) has no objection to the Manager proceeding with the Transaction Matters Requiring Approval, subject to approval of the Independent Unitholders.

The Trustee has not made any assessment of the merits or impact of the Transaction Matters Requiring Approval, other than for the purposes of fulfilling its fiduciary duties set out in the Trust Deed and the REIT Code. Accordingly, the Trustee urges all Unitholders, including those who are in any doubt as to the merits or impact of the Transaction Matters Requiring Approval, to seek their own financial or other professional advice.

12. EXTRAORDINARY GENERAL MEETING AND CLOSURE OF REGISTER OF 1(j) UNITHOLDERS

The EGM will be held at 11:00 a.m. on 18 July 2013 at Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong, for the purpose of considering and, if thought fit, passing with or without amendments, the Ordinary Resolutions set out in the EGM Notice, which is set out on pages N-1 to N-3 in this Circular.

—84— LETTER TO THE UNITHOLDERS

The Register of Unitholders will be closed from 16 July 2013 to 18 July 2013, both days inclusive, to determine which Unitholders will qualify to attend and vote at the EGM, during which period no transfers of Units will be effected. For those Unitholders who are not already on the Register of Unitholders, in order to qualify to attend and vote at the EGM, all Unit certificates accompanied by the duly completed transfer documents must be lodged with Unit Registrar of Regal REIT, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration by 4:30 p.m. on 15 July 2013.

You can vote at the EGM if you are a Unitholder on 18 July 2013, which is referred to in this Circular as the EGM Record Date. You will find enclosed with this Circular the EGM Notice (please refer to pages N-1 to N-3 in this Circular) and a form of proxy for use for the EGM.

Your vote is very important. Accordingly, please complete, sign and date the enclosed form of proxy, whether or not you plan to attend the EGM in person, in accordance with the instructions printed on the form of proxy, and return it to the Unit Registrar of Regal REIT, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong. The form of proxy should be completed and returned as soon as possible but in any event not less than 48 hours before the time appointed for holding the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

Persons who have an interest in the EGM Resolutions (which includes all the persons referred to in section 10 headed “Implications of the SW Transaction and the NP Transaction under the REIT Code and the Trust Deed” above) must decline to accept appointment as proxies in respect of the EGM Resolutions unless the Unitholder concerned has specific instructions in his form of proxy as to the manner in which his votes are to be cast in respect of the EGM Resolutions.

13. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the Appendices to this Circular.

Yours faithfully, By order of the Board Regal Portfolio Management Limited as manager of Regal Real Estate Investment Trust

Francis CHIU Director

—85— LETTER FROM THE INDEPENDENT BOARD COMMITTEE 1(o)

Managed by

29 June 2013

To: The Independent Unitholders of Regal REIT

Dear Sir or Madam,

We have been appointed as members of the Independent Board Committee to advise you in respect of the Transaction Matters Requiring Approval, details of which are set out in the “Letter to the Unitholders” in the circular dated 29 June 2013 from the Manager to the Unitholders (the “Circular”), of which this letter forms a part. Terms defined in the Circular shall have the same meanings when used in this letter unless the context otherwise requires.

The Independent Financial Adviser has been appointed by the Manager to advise us, the Independent Unitholders and the Trustee as to whether the Transaction Matters Requiring Approval are fair and reasonable. Details of their opinion, together with the principal factors taken into consideration, and assumptions and qualifications in arriving at such opinion, are set out in the “Letter from the Independent Financial Adviser” the text of which is contained in the Circular.

— IBC-1 — LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the opinion of the Independent Financial Adviser and the principal factors and reasons considered by them, we consider that:

Accordingly, we recommend that the Independent Unitholders vote in favour of the EGM Resolutions.

Yours faithfully, For and on behalf of Independent Board Committee of Regal Portfolio Management Limited (as manager of Regal Real Estate Investment Trust)

Mr. John William Mr. Alvin Leslie Mr. Kai Ole CRAWFORD LAM Kwing Wai RINGENSON Independent Independent Independent Non-executive Non-executive Non-executive Director Director Director

— IBC-2 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter, prepared for the purpose of inclusion in this circular, received from Somerley Limited.

SOMERLEY LIMITED 20th Floor Aon China Building 29 Queen’s Road Central Hong Kong

29 June 2013

To: The Independent Board Committee, the Trustee and the Independent Unitholders of Regal REIT

Dear Sirs,

(1) MAJOR ACQUISITION AND CONNECTED TRANSACTIONS IN RELATION TO THE SHARE PURCHASE AGREEMENT AND THE OPTION AGREEMENT TO ACQUIRE THE NEW HOTELS AND (2) CONTINUING CONNECTED TRANSACTIONS

We refer to our appointment to advise the Independent Board Committee, the Trustee and the Unitholders other than those who have a material interest in the EGM Resolutions, and that interest is different from the interests of other Unitholders, i.e. Unitholders other than Regal Hotels and its Associates as regards the Transaction Matters Requiring Approval, details of which are set out in the Letter to the Unitholders contained in this Circular, of which this letter forms a part. Unless otherwise defined, capitalised terms used in this letter shall have the same meanings as defined in this Circular.

Clause 15.1 of the Trust Deed requires any connected transaction to be carried out in accordance with the provisions of the REIT Code and any conditions (including any conditions of waivers or exemptions from the operation of the REIT Code granted by the SFC from time to time) imposed by the SFC from time to time. Under paragraph 8.1 of the REIT Code, connected persons of Regal REIT include, among others, a Significant Holder (that is, a holder of 10% or more of the outstanding Units) and associated companies. Each of Paliburg and Regal Hotels has an effective interest in more than 10% of the Units and therefore is a Significant Holder of Regal REIT. Each of P&R and P&R Finance Limited is an “associated company” of both Paliburg and Regal Hotels within the meaning of the REIT Code. As a result, Paliburg, Regal Hotels, P&R and P&R Finance Limited are each a connected person of Regal REIT within the meaning of the REIT Code. Accordingly, each of the following constitutes a connected transaction of Regal REIT under paragraph 8.5 of the REIT Code:

(a) the execution of the Share Purchase Agreement and the consummation of the transactions contemplated thereunder;

— IFA-1 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) the execution of the Deed of Tax Indemnity in respect of the Sheung Wan Hotel and the consummation of the transactions thereunder;

(c) the execution of the Interior Fit-Out Agency Deed in respect of the Sheung Wan Hotel and the consummation of the transactions thereunder;

(d) the execution of the Option Agreement and the consummation of the transactions contemplated thereunder;

(e) the execution of the Deed of Tax Indemnity in respect of the North Point Hotel and the consummation of the transactions thereunder;

(f) the execution of the Interior Fit-Out Agency Deed in respect of the North Point Hotel and the consummation of the transactions thereunder; and

(g) the transactions contemplated under the Facility Letter and other transactions contemplated under, associated with/or related to the Vendor Facility.

As the maximum aggregate value of the above transactions (including the sum of the Maximum Adjusted SW Hotel Purchase Price, the Maximum Adjusted Final Exercise Price and the full amount of the Vendor Facility) exceeds 5.0% of the latest net asset value of Regal REIT (as disclosed in its latest published audited accounts, and adjusted for any subsequent transactions since their publication), pursuant to paragraph 8.11 of the REIT Code and clause 15.1 of the Trust Deed, the connected transactions in paragraphs (a) to (g) require Independent Unitholders’ approval by way of Ordinary Resolutions at the EGM.

Upon and after completion of the SW Transaction and (assuming the North Point Hotel Option has been exercised) the NP Transaction, members of the Regal REIT Group will enter into the Additional Continuing Connected Transactions with members of the Regal Connected Persons Group in relation to the New Hotels. Details of the Additional Continuing Connected Transactions relating to the New Lease Agreements, the New Hotel Management Agreements and the New Lease Guarantees are set out in section 9 headed “Continuing Connected Transactions” in the Letter to the Unitholders in this Circular. Accordingly, the Manager has requested that the SFC grant the New CCT Waiver Application from strict compliance with the disclosure and unitholders’ approvals requirements under Chapter 8 of the REIT Code in respect of the Additional Continuing Connected Transactions. The Manager will seek approval of the Independent Unitholders at the EGM on the New CCT Waiver Application and the agreements pertaining thereto (being the New Lease Agreements, New Lease Guarantees and New Hotel Management Agreements).

Members of the Regal Connected Persons Group are parties to the SW Transaction and the NP Transaction and, as such, have a material interest in the relevant resolutions to be proposed at the EGM and have to abstain from voting on the EGM Resolutions. Pursuant to the REIT Code and the Trust Deed, Regal Hotels has agreed that it will abstain, and will procure that its Associates will abstain, from voting on the EGM Resolutions. To the best of the Manager’s knowledge, information and belief, after having made reasonable enquiries, the Manager takes the view that save as disclosed above, no other Unitholders are required to abstain from voting at the EGM in respect of the EGM Resolutions and based on the foregoing information, the Trustee is of the same view.

— IFA-2 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee, comprising three Independent Non-executive Directors, namely Messrs. John William CRAWFORD, JP, Kai Ole RINGENSON and Alvin Leslie LAM Kwing Wai, has been constituted to advise the Independent Unitholders in respect of the Transaction Matters Requiring Approval. We have been appointed to advise the Independent Board Committee, the Trustee and Independent Unitholders in this regard.

Somerley Limited is independent of (i) Regal REIT; (ii) the Trustee; (iii) the Manager; (iv) Regal Hotels, the Significant Unitholder, and its subsidiaries; and (v) their respective Associates. Apart from normal professional fees payable to us in connection with this appointment, no arrangements exist whereby we will receive any fees or benefits from the Manager or any other party to the Transaction Matters Requiring Approval.

In formulating our opinion, we have reviewed, amongst others, the Share Purchase Agreement, the Option Agreement, the New Lease Agreements, the New Lease Guarantees, the New Hotel Management Agreements, the Deeds of Tax Indemnity, the Interior Fit-Out Agency Deeds, the Facility Letter, the annual report of Regal REIT for the year ended 31 December 2012 (the “Annual Report”) and other information as set out in this Circular, in particular, the appendices. We have also discussed the valuation methodologies and bases and assumptions for the valuation of the New Hotels with the Independent Property Valuer.

We have also relied on the information and facts supplied, and the opinions expressed, by the Directors and management of the Manager and have assumed that the information, facts and opinions provided to us are true and accurate. We have also sought and received confirmation from the Directors and management of the Manager that no material factors have been omitted from the information supplied and opinions expressed. We have no reason to doubt the truth, accuracy and completeness of the information provided to us or to believe that any material fact or information has been omitted or withheld. We have not, however, conducted an independent investigation into the affairs of the Manager, Regal REIT, the Initial Hotel Properties and the New Hotels. We consider that we have been provided with and have reviewed sufficient information to reach an informed view. We have also assumed that the statements and representations made or referred to in this Circular were accurate and not misleading at the time they were made and continue to be accurate and not misleading at the date of the EGM.

— IFA-3 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS TAKEN INTO ACCOUNT

In arriving at our opinion with regard to the Transaction Matters Requiring Approval, we have taken into account the following principal factors:

1 Background of Regal REIT and rationale for the SW Transaction and the NP Transaction

1.1 Regal REIT

Regal REIT was formed in 2006 to own an investment portfolio of hotel properties in Hong Kong, as more fully described in section 1.3 of this letter below. The formation of Regal REIT followed a global trend to separate hotel ownership from hotel operation, allowing hotel managers and franchisors to focus on hotel operation and brand extension, and hotel real estate investment trust (“REIT”) to focus on asset ownership and growth opportunities. Regal REIT is the first hotel REIT in Hong Kong and focuses on hotel ownership and seeks hotel managers and franchisors to manage its hotel properties.

1.2 Reasons for, and benefits of, the SW Transaction and the NP Transaction

The Board (including all the Independent Non-executive Directors) believes that the SW Transaction and the NP Transaction will bring the following benefits to Unitholders:

(i) The Sheung Wan Hotel and the North Point Hotel will be operated under the “iclub by Regal (富薈酒店)” brand. For further information in respect of the “iclub by Regal (富薈酒店)” brand, refer to section 2.2.3 headed “The SW Transaction and the NP Transaction — Information on the New Hotels — iclub by Regal (富薈酒店)” of the Letter to the Unitholders in this Circular. It is the Manager’s view that operating the New Hotels (and the Wanchai Regal iClub Hotel) under the “iclub by Regal (富薈酒店)” brand will enhance the brand name of “iclub by Regal (富薈酒店)” and provide financial benefits for Regal REIT through economies of scale. For example, a cluster of “iclub by Regal (富薈酒店)” hotels can share the same management team and thereby reduce overheads and improve operating margins.

(ii) The investments in the New Hotels will increase the scale of Regal REIT. The SW Hotel Purchase Price is HK$1,580 million and the Initial Exercise Price of the North Point Hotel Option is HK$1,650 million, and assuming the NP Updated Appraised Value remains unchanged, such investments would increase the appraised value of Regal REIT’s portfolio by approximately 15.4% (from HK$21,032 million as at 31 December 2012 to HK$24,262 million). Also, based on the specifications for the Sheung Wan Hotel and the North Point Hotel provided under the Share Purchase Agreement and the Option Agreement, respectively, Regal REIT’s number of guestrooms would increase by 14.9% (from the 3,929 guestrooms and suites as at 31 December 2012 to approximately 4,515 guestrooms and suites) and the gross floor area of Regal REIT’s property portfolio would increase by 6.5% (from approximately 216,412 sqm as at 31 December 2012 to approximately 230,458 sqm). Such increase in scale may broaden and enlarge Regal REIT’s income base, as well as

— IFA-4 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

further improve Regal REIT’s economies of scale (in a similar way to that described in (i) above. The addition of two new hotels to Regal REIT’s existing portfolio of six properties may also enhance Regal REIT’s market positioning and profile, and consequently, further improve Regal REIT’s attractiveness among a wider group of investors.

(iii) The Option Agreement provides Regal REIT with flexibility as the exercise price adjustment mechanism ensures that any such consideration will be at or below market valuation (as assessed by the Independent Property Valuer, as more fully explained in section 4.7 of this letter below). On the other hand, as the Sheung Wan Hotel is at a later stage of development and expected to be completed more imminently in the fourth quarter of 2013, the Manager does not expect any material change to its value subsequent to 25 June 2013 (the date on which the Independent Property Valuer valued the Sheung Wan Hotel at HK$1,580 million), and, accordingly, the Share Purchase Agreement does not contain a similar purchase price adjustment mechanism.

(iv) The New Lease Agreements will enable Regal REIT to mitigate its exposure to initial start-up risk associated with the operation of the New Hotels, and ensure that Regal REIT receives a base level of income during the terms of the New Lease Agreements. The annual rent for the first-three years of each New Lease Agreement, being 5.00% (year 1), 5.25% (year 2) and 5.50% (year 3) of the SW Hotel Purchase Price (in respect of the New Lease Agreement relating to the Sheung Wan Hotel) or the Final Exercise Price (in respect of the New Lease Agreement relating to the North Point Hotel), is expected to contribute additional distributable income to the Unitholders during such period.

(v) The Deposit and the Refundable Cash Collateral will generate interest income for Regal REIT at a rate calculated at the higher of the following: (a) 4.25% per annum; and (b) the weighted average effective interest cost (taking into account the interest rate, issue price, placement fees and commissions) of the Notes issued to finance the payment of the Deposit and the Refundable Cash Collateral, thus resulting in a neutral or positive interest carry in respect of such funds once they are applied towards such purpose. The weighted average effective interest costs of the March 2013 Notes and the May 2013 Notes is 4.3047% per annum. Assuming the Deposit and the Refundable Cash Collateral will be funded from the proceeds of the March 2013 Notes and the May 2013 Notes, as is currently intended, the Deposit and the Refundable Cash Collateral will accrue interest at a rate of 4.3047% per annum. Otherwise, such cash proceeds may have to be placed on bank deposits earning a much lower rate of interest.

— IFA-5 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1.3 The Initial Hotel Properties and the Wanchai Regal iClub Hotel

The Initial Hotel Properties, comprising Regal Airport Hotel, Regal Hongkong Hotel, Regal Kowloon Hotel, Regal Oriental Hotel and Regal Riverside Hotel, were acquired by Regal REIT in 2007. In October 2009, Regal REIT completed the acquisition of 75% beneficial interest in a commercial building located in Wanchai. Part of that building has since been converted into 50 hotel rooms for the establishment of the Wanchai Regal iClub Hotel. Business operations of the Wanchai Regal iClub Hotel commenced in December 2009. The second stage conversion project at the Wanchai Regal iClub Hotel was completed in December 2010 and added another 49 fully furnished hotel guestrooms and suites. All the 99 guestrooms and suites in the Wanchai Regal iClub Hotel have been in full operation since 17 December 2010. Regal REIT completed the acquisition of the remaining 25% beneficial interest in that building on 31 December 2010 and, since then, it has been 100% owned by Regal REIT.

Set out below are the key specifications and operating parameters of the Initial Hotel Properties and the Wanchai Regal iClub Hotel.

Appraised value as of 31 Average Hotel December Estimated room rate occupancy 2012 net Number of Gross floor Rental under respective Lease in 2012 rate in (HK$ property Hotel Type rooms area (sqm) Agreements (HK$ million) (HK$) 2012 million) yield Variable Base rent Base rent rent in in 2013 in 2012 2012 Regal Airport High 1,171 71,988 212 190 1,083 88% 3,300 7.0% Hotel Tariff A Regal High 482 25,083 146 129 1,492 89% 4,630 3.2% Hongkong Tariff A Hotel 138.6 Regal Kowloon High 600 31,746 150 130 1,276 91% 5,370 3.0% (Note 1) Hotel Tariff A Regal Oriental High 439 22,601 76 65 888 86% 2,080 3.3% Hotel Tariff B Regal Riverside High 1,138 59,668 150 131 796 93% 4,750 3.6% Hotel Tariff B Wanchai Regal High 99 5,326 Not applicable (Note 2) 1,303 97% 902 3.6% iClub Hotel Tariff B Total/Average 3,929 216,412 734 645 138.6 1,063 90% 21,032 3.9%

Sources: The Annual Report and the market rental package for 2013 as determined by an independent professional property valuer (based on the announcement of the Manager of Regal REIT dated 27 August 2012).

Notes:

1. The amount of variable rent in 2012 of HK$138.6 million represents the aggregate variable rent of all the Initial Hotel Properties. 2. Unlike the Initial Hotel Properties, where the hotel management agreements (“HMA”) were entered into by a lessee. In relation to the Wanchai Regal iClub Hotel, in the absence of a lease, Regal REIT (through a subsidiary) entered into a HMA directly with the Hotel Manager for cost saving reasons.

— IFA-6 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following map sets out the location of the Initial Hotel Properties and the Wanchai Regal iClub Hotel in Hong Kong:

CHINA

HONG KONG NEW TERRITORIES

KOWLOON PENINSULA

AsiaWorld-Expo 4 Hong Kong International Airport 1 Hong Kong 3 Disneyland Hong Kong Convention & Exhibition 2 Centre 6 LANTAU ISLAND HONG KONG ISLAND

1 Regal Airport Hotel 4 Regal Oriental Hotel 2 Regal Hongkong Hotel 5 Regal Riverside Hotel 3 Regal Kowloon Hotel 6 Wanchai Regal iClub Hotel

For further details of the Initial Hotel Properties and the Wanchai Regal iClub Hotel, please refer to the Annual Report.

— IFA-7 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1.4 The New Hotels

Set out below are the key specifications of the New Hotels.

Gross Expected Valuation as Number Number of floor area completion at 25 June Hotel Location of storey Positioning rooms (sqm) date 2013 (HK$ million) The Sheung Nos. 132-140 34 iclub by 248 7,197 Fourth 1,580 Wan Hotel Bonham Strand, Regal quarter of Sheung Wan, (富薈酒店) 2013 Hong Kong (Note)

The North Point Nos. 14-20 32 iclub by 338 6,849 Second 1,650 Hotel Merlin Street, Regal quarter of North Point, (富薈酒店) 2014 Hong Kong (Note)

Note: Both New Hotels will be branded as “iclub by Regal (富薈酒店)” hotel.

The Sheung Wan Hotel is located in Sheung Wan, offering convenient access to core business districts as well as major shopping and tourist areas. The occupation permit for the Sheung Wan Hotel is expected to be granted by the Building Authority in the fourth quarter of 2013. On this basis, the operation of the Sheung Wan Hotel is anticipated to commence in or around the first quarter of 2014 as the Hotel Manager must first apply for a licence under the Hotel and Guesthouse Accommodation Ordinance and other licences to enable the Lessee and the Hotel Manager to operate a hotel business at the Sheung Wan Hotel, with such applications only able to be submitted after the occupation permit is granted.

The North Point Hotel is located in North Point, one of the key decentralised business districts and a well-established residential area on Hong Kong Island. The occupation permit for the North Point Hotel is expected to be granted by the Building Authority in the second quarter of 2014. On this basis, the operation of the North Point Hotel is anticipated to commence in or around the third quarter of 2014.

Each of the Sheung Wan Hotel and North Point Hotel will be branded as an “iclub by Regal (富薈酒店)” hotel. The “iclub by Regal (富薈酒店)” is a new brand introduced by the Regal Hotels Group, which will also apply to the Wanchai Regal iClub Hotel (which is currently branded as a “Regal iClub” hotel). The “iclub by Regal” is positioned to be an upscale select-service hotel brand (typically with around 100 to 350 hotel guestrooms) complementing the “Regal” brand’s full service offering. The hotels are planned to be predominantly located in the world’s gateway cities and close to the financial centres, regional business centres, convention and exhibition venues, shopping and entertainment hubs, or popular tourist spots with sights and attractions, and conveniently accessed by efficient transport infrastructure. The “iclub by Regal (富薈酒店)” branded hotels are designed according to international quality hotel standards and feature contemporary, chic, trendy, stylish and modern décor and design. The

— IFA-8 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

guestrooms are designed with plenty of glass to balance indoor lighting and natural daylight, furnished with comfortable furniture and bedding and equipped with tech-savvy facilities such as LCD TV, iPod speaker, free internet and free WiFi, which are customised for international multi-tasking executives and leisure travellers.

“iclub by Regal (富薈酒店)” offers discerning tech-savvy business and leisure travellers a relaxed life-style, with built-in express check-in and check-out system for time conscious travellers, selective refreshments and beverages served at a cozy lounge, and purposeful facilities such as “iclub Business Center” with intimate, friendly and tasteful ambience. “iclub by Regal (富薈酒店)” also offers international business and leisure travelers a smart, dynamic, efficient, functional, convenient and pleasant travelling experience that meets the needs of contemporary international business travellers, at the right price with good value for money lodging. The symbol “i” stands for “international”, “intelligent” and “information technology enabled”.

Further details of the New Hotels are set out in section 2.2 headed “Information on the New Hotels” of the Letter to the Unitholders in this Circular.

1.5 Holding and contractual structures of Regal REIT’s existing hotel portfolio and the New Hotels

The hotel business is generally cyclical and sensitive to the prevailing economic environment, political developments and any outbreak of a health epidemic, such as Severe Acute Respiratory Syndrome (or commonly known as SARS). To generate a stable rental income, Regal REIT has entered into long-term Lease Agreements granting operating leases of the Initial Hotel Properties to a lessee, being a wholly-owned subsidiary of Regal Hotels, in return for a fixed, plus a variable, stream of recurring rental payments and has entered into the Hotel Management Agreements granting the operation of the Initial Hotel Properties to the Hotel Manager. As the Wanchai Regal iClub Hotel carries only a relatively small number of rooms, the Manager opted to enter into a hotel management agreement (but not a lease agreement) directly with the Hotel Manager to improve the cost-efficiency for Regal REIT.

— IFA-9 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For the benefit of the readers of this letter, we set out below a simplified diagram showing a general overview of the structure of Regal REIT and the primary structural and contractual relationships in relation to the Initial Hotel Properties (which is equally applicable to the New Hotels) among Regal REIT, the Manager, the Trustee, the Lessee, the Hotel Manager, the other Unitholders and Regal Hotels.

Regal Hotels Other Unitholders

74.55% 25.45% 100% Management Trustee services services Manager Regal REIT Trustee

Lease Management Trustee fee payments fee

Leases

Lease Lease Guarantees Agreements Hotel Management Ag reements

100% Hotel management services Hotel Manager Lessee

Hotel management fee 100%

Equity interest

Payment and services relationship under the Trust Deed, the Lease Agreements and the Hotel Management Agreements

Contractual relationships under the Trust Deed, the Lease Agreements, the Hotel Management Agreements and the Lease Guarantees

Note: The relationship illustrated by the above diagram is not applicable to the Wanchai Regal iClub Hotel, as the Wanchai Regal iClub Hotel has a different contractual structure for its operations.

Lease arrangements similar to the Initial Hotel Properties will be entered into by Regal REIT (through SW Property Company and NP Property Company) with the Lessee, which will be a wholly-owned subsidiary of Regal Hotels, upon completion of each of the SW Transaction and NP Transaction. To secure the performance of the Lessee under the New Lease Agreements, the New Lease Guarantees will be entered into by Regal Hotels (as guarantor) to guarantee, among other things, payment of all amounts from time to time owing or payable by the Lessee under the New Lease Agreements.

— IFA-10 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Lessee, together with the relevant Lessor and Regal Hotels, will also enter into a hotel management agreement with the Hotel Manager in respect of each of the Sheung Wan Hotel and the North Point Hotel concurrently with the execution of the relevant New Lease Agreement. The Hotel Manager will be engaged to act as the exclusive operator and manager of each New Hotel to supervise, direct and control the management, operation and promotion of the business of the relevant New Hotel after the issuance of the applicable hotel licence.

1.6 Rationale for the SW Transaction and the NP Transaction

As stated in the Annual Report, Regal REIT’s and the Manager’s primary objectives are to provide long-term stable, growing distributions and capital growth for Unitholders. In addition, Regal REIT and the Manager’s vision is to, among other things, build up the existing portfolio of hotel properties with primary focus in Hong Kong and to be a pre-eminent owner of quality international hotels. The Manager intends to achieve such objectives and vision by way of (i) internal growth through asset enhancement opportunities and operational improvements; (ii) external growth through potential acquisitions that meet the Manager’s investment criteria; and (iii) financing through an appropriate capital structure.

1.7 Our view

Since 2009, Regal REIT has experienced a significant growth in the average room rate at its Initial Hotel Properties. The compounded annual growth rate of Regal REIT’s average room rate for the Initial Hotel Properties from 2009 to 2012 was approximately 11%. The average occupancy rate of Regal REIT’s hotel portfolio also reached to over 90% in both 2011 and 2012. We consider there is a limitation for further organic growth by way of maximising room rates and occupancy levels in Regal REIT’s existing hotel portfolio in the future. With high barriers of entry of investing in hotel market and a generally positive outlook of tourism sector and hotel market as more fully explained in section 2 below, we therefore consider the Manager’s strategy to achieve the primary objectives of providing long-term stable, growing distributions and capital growth for Unitholders and to grow Regal REIT’s hotel portfolio through the proposed transactions is reasonable.

We also consider adopting a similar leasing and management structure of the Initial Hotel Properties for the New Hotels, i.e. the entering into of the New Lease Agreements, the New Lease Guarantees and the New Hotel Management Agreements, is reasonable as (i) the master lease and guarantee structure provides a generally stable rental income stream to Regal REIT and its Unitholders against the more cyclical nature of hotel revenue as well as the uncertainty of the start-up nature of the New Hotels; and (ii) the operation of the New Hotels under the “iclub by Regal (富薈酒店)” brand (through entering into of the New Hotel Management Agreements) is consistent with the investment policy and strategy of Regal REIT which will continue to enhance the brand name of “iclub by Regal (富薈酒店)” since the full operation of the Wanchai Regal iClub Hotel in December 2010. Furthermore, the addition of two new hotels operating under the “iclub by Regal (富薈酒店)” concept provides Regal REIT with a more balanced hotel portfolio by having five traditional hotels and three select-service hotels upon completion of the SW Transaction and the NP Transaction.

— IFA-11 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The net profit margin of the Wanchai Regal iClub Hotel was around 60% in both 2012 and 2011, which was above the gross operating profit margin of the Initial Hotel Properties of around 50% during the same period. In light of the above, we consider it reasonable for Regal REIT to expand its portfolio of hotels with the concept and operating structure similar to “iclub by Regal (富薈酒店)” and to enhance the overall profitability of the portfolio of hotels.

2 Market outlook

2.1 Hong Kong tourism industry outlook

Hong Kong’s tourism industry has continued to perform well in recent years and the industry is established as a major pillar of Hong Kong’s economy. In 2012, visitor arrivals reached 48.6 million, growing by 16% year-on-year. Mainland China continues to be the largest source of inbound tourism arrivals to Hong Kong, with its distinct and unique offerings for Mainland tourists, while visitors from other short-haul markets, mainly from Asia, contributes a significant portion of the rest. 71.8% and 16.6% of the visitors to Hong Kong in 2012 came from Mainland China and other Asian countries, respectively. The tourism industry in Hong Kong is therefore heavily dependent on the region’s economy and consumers, especially Mainland China.

Source: The Hong Kong Tourism Board (“HKTB”)

Asia’s economies are returning to healthy growth. In the face of continued uncertainties in the United States, the euro area and Japan, the region is finding ways to bolster its resilience. As set out in “Asian Development Outlook 2013” in early 2013, the Asian Development Bank estimates regional growth will pick up to 6.6% in 2013 and reach 6.7% in 2014. With the major industrial economies expected to grow by only 1% in 2013, the roles of domestic demand and intra-Asian trade will continue to expand. Furthermore, growth acceleration in the PRC is supporting the rebound in the region. Although the gross domestic products (the “GDP”) growth of the PRC has

— IFA-12 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER been slowing down as a result of, among other factors, faltering exports, softening domestic demand and slowdowns in production, in the past few years, the Asian Development Bank predicts the GDP of the PRC will continue to expand by 8.2% in 2013 and 8.0% in 2014, up from 7.8% in 2012.

In view of the above and despite the continued stagnant economic growth in Europe and North America, the tourism industry of Hong Kong is likely to remain relatively robust with its strong fundamentals. According to the Travel and Tourism Competitiveness Report 2013, Hong Kong is ranked 15th overall worldwide in the world and 5th regionally in Asia Pacific in terms of travel and tourism competitiveness. This is due to Hong Kong’s transport infrastructure being among the most developed in the world, being a safe and secure destination, having a conducive business environment with numerous international fairs and exhibitions being held and scoring high on cultural resources.

The Hong Kong government has taken measures to improve the tourism infrastructure by upgrading some of the existing attractions and creating new ones. For example, to provide more hotel options to visitors, a number of sites in Hong Kong have been designated as “hotel only” sites. There are also initiatives to allow for the conversion of old buildings and for the re-vitalisation of heritage buildings into hotels. Ocean Park and Hong Kong Disneyland are also being expanded and a new cruise terminal recently opened at Kai Tak is expected to draw more tourist arrivals internationally. In addition, the Mega Events Fund has been established to attract new or established high profile mega events to be held in Hong Kong. The Hong Kong and PRC governments are working towards creating greater synergies for tourism, such as joint manpower training and with the overseas promotion of multi-destination itineraries which include stops in both Hong Kong and Mainland China.

The transportation infrastructure developments in Hong Kong will boost the city in attracting new visitors and provide an all-round better travel experience. The expansion of the airport will enable a larger throughput of passengers and additional capacity for airlines. Linkages with Mainland China will be boosted such as with the opening of the Guangzhou-Shenzhen-Hong Kong Express Rail Link Railway in 2015, which will be linked up to China’s National High-speed Railway Network covering most major Mainland cities including Beijing, Guangzhou and Shenzhen to be completed by 2020. Last but not the least, the Hong Kong-Zhuhai-Macao Bridge is scheduled to be in operation in 2016 and it will facilitate Mainland Chinese visitors from the Pearl River Delta to arrive in Hong Kong in shorter travel times.

All in all, with the improving regional economy, the upgrading of attractions together with the enhanced transportation infrastructure, Hong Kong is set to remain a key tourism destination both on a regional and worldwide basis. Although at a lower rate as compared to previous years, visitor arrivals from all markets are anticipated to have positive and encouraging growth till 2020, according to the Hong Kong Tourism Demand Forecasting System by the Hong Kong Polytechnic University. This is also in line with the Market Consultant’s view that the current levels of tourism arrivals will be sustained and grow over the next three to five years and this will play a key role in the overall tourism market for Mainland China.

— IFA-13 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.2 Hong Kong hotel market outlook

With visitor arrivals hitting new highs, the promising outlook of the Hong Kong tourism industry, together with the rising number of Mainland Chinese visitors and their increasing wealth, developers and investors are optimistic about Hong Kong’s hotel market.

According to the Market Consultant’s Report, it is anticipated that the increase in the supply of hotel rooms will slow down starting from 2014, after the boost in 2013. The average growth of hotel rooms was around 6% in the past five years. However, the average growth is expected to drop to less than 2% in 2014-2017, based on the current schedule of completions of HKTB. There will be an imbalance, as the growth rate of visitor arrivals is expected to be much greater than the growth of hotel rooms available. The Market Consultant is of the view that the unscheduled supply will come to the market after 2016. Therefore, the shortage of hotel rooms will be an essential factor boosting up the occupancy rates and average room rates.

Despite visitor arrivals from long haul markets being relatively weak, the demand for hotel rooms will be supported by Mainland Chinese visitors. Therefore, High Tariff B and Medium Tariff hotels are expected to outperform as these types of hotels are more preferred by Mainland Chinese visitors. Weak performance in the financial sector will limit corporate travel budgets. However, the continued development of the convention and exhibition market in Hong Kong will provide certain support to the hotel industry. This will continue to attract business travellers, providing strong support to High Tariff A and B hotels, especially those in prime locations with excellent transportation linkages.

All in all, the market sentiment for the hotel industry in Hong Kong is generally positive. Rising room rates and sustained growth in demand translates into a relatively stable yield for hotel properties. However, limited sites are available for development of hotels in core districts and therefore investors are switching their focus to fringe areas or peripheral locations which are supported by attractions, popular shopping destinations and with an established infrastructure. Furthermore, the government has also undertaken a number of initiatives to promote hotel development to meet the diversified needs of visitors. Therefore, it is expected that there will be an increasing amount of hotel supply in non-core districts. Despite the continued global economic uncertainty, the hotel industry is expected to be well supported by Mainland visitors. The Market Consultant, therefore, is of the view that the Hong Kong hotel market is likely to remain relatively stable in 2013.

There will be a new supply of hotel rooms in the Western District and North Point, where the Sheung Wan Hotel and the North Point Hotel are located, respectively. However, it is expected that such new supply will be absorbed quickly by business travellers and Mainland Chinese visitors and will not create a negative effect on the hotel performance in those districts.

On balance, the overall hotel market is expected to keep its momentum in the next few years. In particular, High Tariff B hotels located in areas with good infrastructural facilities or concrete development plans from the government will outperform in the coming years, as there is a shortage of affordable hotel rooms in prime locations. Although a number of hotels are scheduled

— IFA-14 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

to be completed in the next five years, it is believed that there will be no material negative impact on the New Hotels. Efficient and select services hotels such as the New Hotels have received a good response in terms of both occupancies and average room rates in recent years, providing good prospects for the New Hotels.

Barring unforeseen circumstances, we consider the outlook of the hotel market in Hong Kong is generally positive and we also concur with the observations of the Manager, the Market Consultant as well as the Independent Property Valuer. Further information on the hotel industry, including the general Hong Kong economic environment, the Hong Kong tourism industry and hotel market and their outlooks are set out in the Independent Property Valuation Reports and the Market Consultant’s Report in appendices 4 and 5 to this Circular, respectively.

3 The SW Transaction

The Trustee entered into the Share Purchase Agreement for the acquisition of the Sheung Wan Hotel with P&R on 28 June 2013.

3.1 Share Purchase Agreement for the Sheung Wan Hotel

Pursuant to the Share Purchase Agreement, P&R has agreed to sell to the Trustee (or its nominee), as purchaser, the SW Target Company Shares, representing 100% of the issued share capital of the SW Target Company, and assign to the Trustee (or its nominee) the SW Shareholder Loan, subject to the terms and conditions as set out therein, which are summarised in section 3.1 of the Letter to the Unitholders in this Circular. The SW Target Company is a company incorporated in the British Virgin Islands solely for the purpose of holding the entire issued share capital of the SW Property Company (being the registered owner of the Sheung Wan Hotel). The Sheung Wan Hotel is currently under development and is expected to be completed (as evidenced by the issuance of an occupation permit) in the fourth quarter of 2013.

3.2 Consideration and payment terms under the Share Purchase Agreement

The SW Hotel Purchase Price is HK$1,580 million, plus the Current Assets Adjustment provided that such adjustment will be capped at HK$1.5 million. The total sum of the SW Hotel Purchase Price plus the Current Assets Adjustment reflects the consideration payable in respect of the acquisition of the SW Target Company Shares and the assignment of the SW Shareholder Loan, and (apart from the Deposit) will be payable at completion of the SW Transaction.

— IFA-15 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out in the table below are the expected timing for payment in connection with the SW Transaction, basis of consideration and financing of the payment.

Basis of Time Consideration consideration Financing Remarks Upon signing of Nil — — — the Share Purchase Agreement

Within two Deposit of The proceeds of • 100% Business Days HK$948 million the March 2013 refundable following the (60% of the SW Notes and the upon satisfaction of Hotel Purchase May 2013 Notes termination of conditions in Price) in cash the Share paragraphs (a) and Purchase (b) of section 3.1.4 Agreement Arrived at on a of the Letter to the • interest willing Unitholders in this bearing (see buyer/seller in Circular below) an arm’s length transaction At completion of Remaining A combination — basis, after the SW Transaction balance of the of (i) bank taking into SW Hotel facilities; (ii) account the SW Purchase Price the Notes Appraised Value of HK$632 issuable under and completion million (40% of the Regal REIT of the SW the SW Hotel MTN Interior Fit-Out Purchase Price) Programme; (iii) Programme in cash the Vendor Facility; and/or Current Assets (iv) internal — Adjustment of resources (see up to HK$1.5 details in million in cash section 6 of this letter below)

The Deposit shall not be deposited into an escrow account and may be used by P&R without restriction, but P&R shall pay interest quarterly on the Deposit. Interest shall accrue from the date of payment up to the date the Deposit shall be refunded to the Trustee or applied towards part payment of the SW Hotel Purchase Price. The interest rate shall be calculated at the higher of the following:

(a) 4.25% per annum, which is the interest rate of the notes due 2017 issued by Regal Hotels pursuant to its medium term note programme; and

— IFA-16 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) the weighted average effective interest cost to Regal REIT (taking into account the interest rate, issue price, placement fees and commissions) of the Notes issued used to finance the payment of the Deposit.

Currently, the Manager intends to finance the payment of the Deposit from the proceeds of the March 2013 Notes and the May 2013 Notes, which have a weighted average effective interest cost of 4.3047% per annum. In this case, interest on the Deposit shall accrue at the rate of 4.3047% per annum.

3.3 The construction undertakings

Pursuant to the construction undertakings under the Share Purchase Agreement, P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) shall procure the SW Property Company to cause its building contractors to promptly and diligently proceed with and complete the building construction works in a proper and workmanlike manner in accordance with the relevant building contract plans and specifications and all applicable laws and regulations.

The aforesaid undertakings ensure completion of construction on the Sheung Wan Hotel meets with the prescribed specifications and standards and, therefore, are beneficial to Regal REIT.

3.4 The SW Interior Fit-Out Programme, the Interior Fit-Out Agency Deed and the Deed of Tax Indemnity

Pursuant to the SW Interior Fit-Out Programme and the Interior Fit-Out Agency Deed, P&R has undertaken that it will complete, and/or will procure the completion of, the SW Interior Fit-Out Programme at its sole cost and expense.

P&R and the Guarantors will at completion of the SW Transaction enter into the Deed of Tax Indemnity in favour of the Trustee and the SW Target Group, pursuant to which P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) will indemnify, among other things, any liability for taxation resulting from or by reference to any event occurring on or before completion of the SW Transaction or in respect of any income, profits or gains earned, accrued or received by any of the SW Target Group on or before completion of the SW Transaction.

The SW Interior Fit-Out Programme and the Interior Fit-Out Agency Deed ensure completion of interior fit-out work on the Sheung Wan Hotel meets with the prescribed specifications and standards and the Deed of Tax Indemnity will indemnify the potential tax liability, if any, in relation to the SW Transaction and the SW Target Group prior to completion of SW Transaction and, therefore, they are beneficial to Regal REIT.

— IFA-17 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.5 Conditions precedent and other terms

Completion of the SW Transaction is conditional upon the satisfaction or waiver of, among other things, the following conditions:

(e) the occupation permit required under the Buildings Ordinance (Chapter 123 of the Laws of Hong Kong) for the Sheung Wan Hotel having been obtained; and

(f) the Trustee and the Manager being provided with such evidence as they may reasonably require confirming (to the satisfaction of the Manager and the Trustee) that all indebtedness under the existing bank loans of the SW Target Company and the SW Property Company shall be discharged, all shares in the capital of the SW Target Company and the SW Property Company shall be released from all encumbrances, and all other security created by the SW Target Company and the SW Property Company in connection with such existing bank loan (including, without limitation, the existing mortgage), shall be released on or before completion of the SW Transaction.

Other conditions precedent and key terms under the SW Transaction are set out in sections 3.1 of the Letter to the Unitholders in this Circular.

— IFA-18 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.6 Our view

The obligation of Regal REIT to pay the refundable Deposit of HK$948 million upon approval by the respective shareholders and/or Unitholders of each of the Guarantors, Century City and Regal REIT has been covered by (i) the proceeds of the March 2013 Notes in aggregate principal amount of HK$775.0 million; and (ii) the proceeds of the May 2013 Notes in aggregate principal amount of U.S.$150.0 million (equivalent to approximately HK$1,164 million). As stated in section 3.2 of this letter above, the Deposit will accrue interest income for Regal REIT at the rate of 4.3047% per annum, being the weighted average effective interest cost of the Notes, until completion of the SW Transaction.

As stated in section 3.2 of this letter above, the Deposit will (i) accrue interest income for Regal REIT at the rate of 4.3047% per annum, being the weighted average effective interest cost of the March 2013 Notes and the May 2013 Notes; (ii) not be held in an escrow account and may be used by P&R without restriction; and (iii) represent 60% of the SW Hotel Purchase Price. We are of the view that such term is a specially tailored arrangement among the parties to the transaction that, while is not customary or in line with market practices, on balance, is beneficial to Regal REIT. It allows Regal REIT to enjoy interest income on the Deposit sufficient to cover the finance costs incurred for the funds already raised from the issue of the March 2013 Notes and the May 2013 Notes, which will otherwise be idle, for the period from payment up to completion of the SW Transaction. The Guarantors, being Regal Hotels and Paliburg, have guaranteed the obligations of P&R pursuant to the Share Purchase Agreement, including the refund of such Deposit. We have therefore also reviewed the businesses, financial positions and results of each of the Guarantors as set out below.

In respect of Regal Hotels

• Regal Hotels, a Hong Kong listed company (stock code: 78), is the holding company of Regal REIT, holding around 74.55% of the outstanding Units. Regal Hotels and its subsidiaries are principally engaged in hotel ownership undertaken through Regal REIT, hotel operation and management, asset management of Regal REIT through the Manager, property development and investment, including projects undertaken through the joint venture in P&R and interests in retained houses in Regalia Bay in Stanley on Hong Kong Island, and other investment businesses.

• As set out in its annual report for the year ended 31 December 2012 (the “Regal Hotels 2012 Annual Report”), Regal Hotels had consolidated NAV of approximately HK$11,735.2 million (excluding non-controlling interests) as at 31 December 2012 and recorded consolidated revenue for the year ended 31 December 2012 of approximately HK$2,330.9 million, the majority of which was generated from the operation and management of the Initial Hotel Properties. The consolidated net profit and consolidated net cash flow from the operating activities of Regal Hotels for the year ended 31 December 2012 were approximately HK$585.8 million and approximately HK$423.3 million, respectively.

— IFA-19 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• As at 31 December 2012, Regal Hotels Group had time deposits and cash and bank balances of approximately HK$2,339.4 million, current liabilities of approximately HK$507.6 million and non-current liabilities of approximately HK$8,140.7 million, of which approximately HK$4,776.1 million was Regal REIT’s bank borrowings, approximately HK$2,293.8 million was Regal Hotel’s unsecured 5-year notes due in 2017 and approximately HK$1,065.5 million was a deferred tax liability.

• As at 31 December 2012, the gearing ratio of Regal Hotels Group was 20.3%, being the borrowings net of cash and bank balances and deposits as compared to its total assets.

In respect of Paliburg

• Paliburg, a Hong Kong listed company (stock code: 617), is the holding company of Regal Hotels, holding approximately 54% of the outstanding shares of Regal Hotels according to Regal Hotels 2012 Annual Report. Paliburg and its subsidiaries are principally engaged in property development and investment, construction and building related businesses, hotel ownership, hotel operation and management, asset management and other investments. The significant investments and business interests of Regal Hotels, Paliburg’s principal listed subsidiary, are set out above.

• As set out in its annual report for the year ended 31 December 2012, Paliburg had consolidated NAV of approximately HK$11,133.4 million (excluding non-controlling interests) as at 31 December 2012 and recorded consolidated revenue for the year ended 31 December 2012 of approximately HK$1,722.4 million. The consolidated operating profit (after excluding the one-off gain on bargain purchase of a listed subsidiary and other fair value changes) of Paliburg for the year ended 31 December 2012 was approximately HK$284.9 million and consolidated net cash flows from the operating and investing activities of Paliburg for the year ended 31 December 2012 were approximately HK$847.2 million.

• As at 31 December 2012, Paliburg and its subsidiaries (the “Paliburg Group”) had time deposits and cash and bank balances of approximately HK$4,067.9 million, current liabilities of approximately HK$789.2 million and non-current liabilities of approximately HK$10,438.3 million, of which approximately HK$4,776.1 million was Regal REIT’s bank borrowings, approximately HK$2,293.8 million was Regal Hotel’s unsecured 5-year term notes due in 2017 and approximately HK$2,286.8 million was a deferred tax liability.

• As at 31 December 2012, the gearing ratio of Paliburg Group was 10.5%, being the borrowings net of cash and bank balances and deposits as compared to its total assets.

Based on the above and in particular the gearing ratios which were considered very prudent for property-related groups, we consider that Regal Hotels and Paliburg have the capability to meet their respective obligations under the Share Purchase Agreement, including the refund of the Deposit (if required).

— IFA-20 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We are of the view that the payment of the refundable Deposit may not be considered as a financing to Regal Hotels on the basis that Regal Hotel’s financing cost is only 4.25% per annum (being the interest rate of the notes due 2017 issued by Regal Hotels pursuant to its medium term note programme) while the interest rate payable by Regal Hotels on the Deposit will be a higher interest rate of 4.3047% per annum. The higher interest rate on the Deposit does not give any incentive to Regal Hotels to finance through Regal REIT.

On the basis that (i) the SW Hotel Purchase Price is equivalent to the SW Appraised Value (which we consider is fair and reasonable as discussed in section 5 of this letter) and the Current Assets Adjustment to the SW Hotel Purchase Price is customary and on a dollar-for-dollar basis; (ii) completion of the SW Transaction is conditional on, among other things, the Manager being satisfied with the due diligence results of the SW Target Group including the Sheung Wan Hotel; (iii) funds for the payment of the Deposit are already in place; (iv) the interest expense associated with the payment of the Deposit will be fully reimbursable by P&R (from the date of payment of the Deposit); and (v) the availability of financing of the remaining balance of the SW Hotel Purchase Price (as discussed in section 6 of this letter), we therefore consider the terms of the Share Purchase Agreement are fair and reasonable and in the interests of Regal REIT and the Independent Unitholders.

We are also of the view the conditions precedent to the Share Purchase Agreement are in general normal for contracts similar to this type and the representations, warranties and indemnity in the Share Purchase are in line with general market practices.

The financing options available to Regal REIT for the payment of the remaining SW Hotel Purchase Price of HK$632 million are discussed in section 6 of this letter.

4 The NP Transaction

The Trustee entered into the Option Agreement for the future acquisition of the North Point Hotel with P&R on 28 June 2013.

4.1 The Option Agreement for the North Point Hotel

— IFA-21 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4.2 Option Fee and exercise price under the Option Agreement

The Option Fee payable under the Option Agreement of HK$10 million and the Refundable Cash Collateral of HK$990 million are payable within two Business Days following the satisfaction of conditions to the grant of the North Point Hotel Option described in section 3.2.2 of the Letter to the Unitholders in this Circular. At completion of the NP Transaction, the Option Fee shall be applied against part of the Final Exercise Price while the Refundable Cash Collateral of HK$990 million will be refunded to Regal REIT and, together with any interest accrued and unpaid in respect of the same, used to finance part of the Final Exercise Price. The balance of the Final Exercise Price will also be payable at completion of the NP Transaction.

The Initial Exercise Price of the North Point Hotel is HK$1,650 million (which is equivalent to the NP Initial Appraised Value) and is subject to an initial adjustment based on an updated valuation of the North Point Hotel as appraised by the Independent Property Valuer as of the last month end date before the grant of the occupation permit for the North Point Hotel.

The Initial Exercise Price shall be initially adjusted as follows:

(a) if the NP Updated Appraised Value is lower than the NP Initial Appraised Value, the exercise price will be adjusted to the NP Updated Appraised Value; or

(b) if the NP Updated Appraised Value is higher than the NP Initial Appraised Value, the exercise price will be adjusted to the average of the NP Updated Appraised Value and the NP Initial Appraised Value.

In addition to the Final Exercise Price, the Trustee may be required to pay the Current Assets Adjustment, provided that such adjustment will be capped at HK$1.5 million. The total sum of the Final Exercise Price plus the Current Assets Adjustment shall therefore not exceed HK$1,826.5 million. Under the Option Agreement, the Final Exercise Price (before the Current Assets Adjustment) is subject to a cap of HK$1,825 million and a floor of HK$1,300 million, unless otherwise agreed between P&R and the Trustee (acting on the instructions of the Manager) as further explained in section 4.3 in this letter below.

— IFA-22 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out in the table below are the expected timing of payment in connection with the NP Transaction, basis of consideration and financing of the payment.

Time Consideration Basis of consideration Financing Remarks Upon signing of the Nil — — — Option Agreement

Within two Business (1) Option Fee of Internal resources • The Option Fee will be refundable Days following the HK$10 million in if, among other things: satisfaction of cash; and (a) the occupation permit of the conditions to the North Point Hotel is not grant of the North obtained by the Long Stop Point Hotel Option Date (30 September 2014); described in section (b) the Manager is not satisfied 3.2.2 of the Letter with the due diligence in to the Unitholders in respect of the North Point this Circular Hotel; (c) the condition to the exercise of the North Point Hotel Option has not been satisfied by the relevant date (except where this is due to the fault of Regal REIT); (d) completion of the NP Transaction does not occur due to the fault of P&R; or (e) the NP Updated Appraised Value is greater than the Maximum NP Updated Appraised Value or lower than the Minimum NP Updated Appraised Value and that the Manager or Trustee decides not to seek additional approval of the independent Unitholders for exercising the North Point Hotel Option on the basis of such NP Updated Appraised Arrived at on a willing Value buyer/seller in an arm’s • non-interest bearing length transaction basis, • The Option Fee shall be applied after taking into against part of the Final Exercise account the NP Initial Price upon completion of the NP Appraised Value and Transaction completion of the NP Interior Fit-Out (2) Refundable Cash The proceeds of the • Refundable Cash Collateral 100% Programme Collateral of March 2013 Notes and refundable upon the earlier of: HK$990 million in the May 2013 Notes • the expiry of the North Point cash Hotel Option; • the termination of the Option Agreement; and • completion of the NP Transaction • interest bearing (see below) • At completion of the NP Transaction, the Refundable Cash Collateral and any interest accrued and unpaid in respect of the same will be used to finance part of the Final Exercise Price.

At completion of the Remaining balance of A combination of (i) — NP Transaction the Final Exercise Price bank facilities; (ii) the (i.e. excluding the Notes issuable under Refundable Cash the Regal REIT MTN Collateral) of HK$650 Programme; (iii) the million (being Vendor Facility; approximately 39.4% of and/or (iv) the internal the Final Exercise Price resources (see details assuming the Final in section 6 of this Exercise Price remains letter below) unchanged at HK$1,650 million) in cash

Current Assets — Adjustment of up to HK$1.5 million in cash

— IFA-23 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(a) 4.25% per annum which is the interest rate of the notes due 2017 issued by Regal Hotels pursuant to its medium term note programme; and

(b) the weighted average effective interest cost to Regal REIT (taking into account the interest rate, issue price, placement fees and commission) of the Notes used to finance the payment of the Refundable Cash Collateral.

Currently, the Manager intends to finance the payment of the Refundable Cash Collateral from the proceeds of the March 2013 Notes and the May 2013 Notes, which have a weighted average effective interest cost of 4.3047% per annum. In this case, interest on the Refundable Cash Collateral shall accrue at the rate of 4.3047% per annum.

4.3 Option exercise mechanics and expiry

The Trustee, acting on the instructions of the Manager, may choose to conditionally exercise the North Point Hotel Option by delivering an exercise notice to P&R during the option exercise period (that is, within 30 days after the occupation permit for the North Point Hotel has been obtained (as notified by P&R to the Trustee and the Manager). Before instructing the Trustee and delivering the exercise notice, the Manager shall be satisfied with the results of its due diligence in respect of the North Point Hotel, including being satisfied that the acquisition of the North Point Hotel will comply with REIT Code requirements. The exercise notice will become unconditional (and the North Point Hotel Option will be exercised) once all relevant and applicable provisions of the REIT Code and the Listing Rules have been complied with, including any further unitholder or shareholder approvals required under such code and rules.

Unless otherwise agreed between P&R and the Trustee (acting on the instructions of the Manager), the North Point Hotel Option will automatically expire if:

(a) the NP Updated Appraised Value is greater than the Maximum NP Updated Appraised Value of HK$2,000 million or lower than the Minimum NP Updated Appraised Value of HK$1,300 million;

(b) the occupation permit for the North Point Hotel is not obtained by the Long Stop Date;

(d) any condition to the exercise of the North Point Hotel Option has not been satisfied within three months from the date of the exercise notice, or such later date as may be agreed by P&R and the Trustee (acting on the recommendation and at the direction of the Manager).

— IFA-24 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For the avoidance of doubt, if the exercise price should exceed the Maximum Adjusted Final Exercise Price, the Manager shall seek additional approval of the Independent Unitholders before exercising the North Point Hotel Option at such exercise price.

4.4 The construction undertakings

Pursuant to the construction undertaking under the Option Agreement, P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) shall procure the NP Property Company to cause its building contractors to promptly and diligently proceed with and complete the building construction work in a proper and workmanlike manner in accordance with the relevant building contract plans and specifications and all applicable laws and regulations.

The aforesaid undertakings ensure completion of construction of the North Point Hotel meets with the prescribed specifications and standards and therefore, are beneficial to Regal REIT.

4.5 The NP Interior Fit-Out Programme, the Interior Fit-Out Agency Deed and the Deed of Tax Indemnity

Pursuant to the NP Interior Fit-Out Programme and the Interior Fit-Out Agency Deed, P&R has undertaken that it will complete, and/or will procure the completion of, the NP Interior Fit-Out Programme at its sole cost and expense.

P&R and the Guarantors will at completion of the NP Transaction enter into the Deed of Tax Indemnity in favour of the Trustee and the NP Target Group, pursuant to which P&R and the Guarantors (on a several basis in equal proportions between the Guarantors) will indemnify, among other things, any liability for taxation resulting from or by reference to any event occurring on or before completion of the NP Transaction or in respect of any income, profits or gains earned, accrued or received by any of the NP Target Group on or before completion of the NP Transaction.

The aforesaid ensure completion of interior fit-out work on the North Point Hotel meets with the prescribed specifications and standards and the Deed of Tax Indemnity will indemnify the potential tax liability, if any, in relation to the NP Transaction and the NP Target Group prior to completion of NP Transaction and, therefore, they are beneficial to Regal REIT.

4.6 Conditions precedent and other terms

The grant of the North Point Hotel Option is conditional upon the satisfaction of the following conditions:

— IFA-25 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The exercise of the North Point Hotel Option will be subject to all relevant and applicable provisions of the REIT Code and the Listing Rules have been complied with, including any further unitholder or shareholder approvals required under such rules, details of which and other terms of the NP Transaction are set out in sections 3.2 of the Letter to the Unitholders in this Circular.

4.7 Our view

Taking into account of the longer timeframe for obtaining the occupation permit for the North Point Hotel and the limitation on the right to acquire uncompleted properties not exceeding 10% of the total NAV of the REIT at the time of acquisition under the REIT Code, it was agreed that the acquisition of the North Point Hotel by Regal REIT shall be subject to an option rather than a definitive share purchase agreement. We consider the option arrangement for the North Point Hotel is beneficial to Regal REIT given (i) it secures the opportunity for Regal REIT to acquire the North Point Hotel; (ii) it provides Regal REIT the flexibility to seek the necessary financing for the NP Transaction; and (iii) the interest expense associated with the payment of the Refundable Cash Collateral will be fully reimbursable by P&R (during the period from the date of payment of the Refundable Cash Collateral to completion of the NP Transaction). Moreover, the adjustment mechanism for the Initial Exercise Price is also advantageous to Regal REIT as any downward adjustment will be fully adjusted for whereas any upward adjustment is limited to the simple average of the NP Updated Appraised Value and the NP Initial Appraised Value. Accordingly, the option arrangement allows Regal REIT to share 50% of the potential upside if the market value of the North Point Hotel appreciates afterwards while the downside will be fully protected through the Initial Exercise Price adjustment mechanism. In the event that the conditions precedent to exercise of the North Point Hotel Option, for example any further approvals by the respective shareholders of each of the Guarantors and Century City, are not obtained (except due to the fault of Regal REIT (i.e. Unitholder approval is not obtained)), the Option Fee of HK$10 million will be fully refunded to Regal REIT.

The Option Fee is HK$10 million and it is non-refundable if the NP Transaction proceeds. Given the Option Fee shall be applied against part of the Final Exercise Price upon completion of the NP Transaction and the benefits of the option arrangement as discussed above, we are of the view that the payment of the Option Fee by Regal REIT is reasonable.

Regal REIT’s obligation to pay the Option Fee of HK$10 million will be funded by internal resources and the Refundable Cash Collateral of HK$990 million will be satisfied by the proceeds from the March 2013 Notes and the May 2013 Notes. The funding plan of the remaining balance of the Final Exercise Price is more fully discussed in section 6 of this letter.

— IFA-26 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Similar to the SW Transaction and as stated in section 4.2 of this letter above, the Refundable Cash Collateral will (i) accrue interest income for Regal REIT at the rate of 4.3047% per annum, being the weighted average effective interest cost of the March 2013 Notes and the May 2013 Notes; (ii) not be held in an escrow account and may be used by P&R without restriction; and (iii) represent 60% of the Initial Exercise Price. As discussed in section 3.5 of this letter above, we are of the view that it is a specially tailored arrangement agreed among the parties to the transaction that, while is not customary or market practice, on balance, is beneficial to Regal REIT. It allows Regal REIT to enjoy interest income on the Refundable Cash Collateral sufficient to recover the finance costs incurred for the funds already raised from the issues of the March 2013 Notes and the May 2013 Notes, which will otherwise be idle, for the period from payment up to completion of the transaction. The Guarantors are considered have the capability to meet their respective obligations under the Option Agreement, including the refund of the Refundable Cash Collateral (if required).

On the basis that (i) the granting of the North Point Hotel Option is beneficial to Regal REIT; (ii) the Initial Exercise Price (excluding the Current Assets Adjustment) is equivalent to the NP Initial Appraised Value (which we consider is fair and reasonable as discussed in section 5 of this letter) and the Current Assets Adjustment to the Final Exercise Price is customary and on a dollar-for-dollar basis; (iii) the adjustment mechanism of the Initial Exercise Price, where the Final Exercise Price must be equal to or less than the NP Updated Appraised Value; (iv) Regal REIT is able to satisfy the funding requirement of the Option Fee of HK$10 million and the Refundable Cash Collateral of HK$990 million; and (v) the interest expense associated with the payment of the Refundable Cash Collateral is fully reimbursable by P&R (from the date of payment of the Refundable Cash Collateral), we therefore consider all terms of the Option Agreement, including all transactions contemplated upon the exercise of the North Point Hotel Option (including the Option Fee, interest rate on the Refundable Cash Collateral, the terms of the acquisition of the North Point Hotel upon the exercise of the North Point Hotel Option) as a whole are fair and reasonable and in the interests of Regal REIT and the Independent Unitholders.

We are also of the view the conditions precedent to the Option Agreement is in general normal for contracts similar to this type and the representations, warranties and indemnity in the Option Agreement are in line with general market practices.

5 Valuation of the Sheung Wan Hotel and the North Point Hotel

The SW Appraised Value and the NP Appraised Value were HK$1,580 million and HK$1,650 million as at 25 June 2013, respectively.

5.1 Valuation methodologies

As stated in the Independent Property Valuation Reports, the Independent Property Valuer adopted the income capitalisation approach — discounted cash flow analysis (the “Income Capitalisation Approach”) and counter-checked by the direct comparison approach (the “Direct

— IFA-27 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Comparison Approach”) in arriving at the SW Appraised Value and the NP Appraised Value (the “Appraised Values”). Details in respect of the Income Capitalisation Approach and the Direct Comparison Approach are set out in the Independent Property Valuation Reports in appendix 4 to this Circular.

We have discussed with the Independent Property Valuer the rationale for adopting the Income Capitalisation Approach as the principal valuation methodology for the New Hotels and counter-checked by the Direct Comparison Approach as well as the bases and assumptions adopted in arriving at the Appraised Values using the Income Capitalisation Approach and the Direct Comparison Approach.

According to the Independent Property Valuer, the Income Capitalisation Approach is the most appropriate valuation approach for assessing the market values of the New Hotels as it would better reflect specific characteristics of the income-producing properties such as the fixed and reversionary rents, lease duration, hotel management arrangement, room rate growth, occupancy rates and all outgoings. The Independent Property Valuer has also made reference to the comparable transactions in Hong Kong around the date of valuation of the New Hotels but there are only limited comparable transactions.

Therefore, the Independent Property Valuer primarily relied on the Income Capitalisation Approach by assessing the long-term return that is likely to be derived from the New Hotels with a combination of projected income over an assumed investment horizon of ten years’ time, where various assumptions including incomes and expenses of the New Hotels and future economic conditions in the market are made, and the potential sales prices of the New Hotels at the end of the investment horizon.

5.2 Valuation bases and assumptions

Although the New Hotels are still under development as at the date of valuation, the valuations of the New Hotels are on as-completed basis, i.e. on the assumption that (i) the New Hotels are fully developed and completed in accordance with the respective development schemes and available for immediate occupation; (ii) the New Lease Agreements and the New Hotel Management Agreements have become effective as at the date of the valuation; and (iii) in relation to the North Point Hotel only, the Final Exercise Price is HK$1,650 million, being the same as the Initial Exercise Price. The New Hotels, upon completion, will be hotels up to the standard of the Wanchai Regal iClub Hotel, which is a High Tariff B hotel with 99 guestrooms and a total gross floor of 5,326 sqm located in Wanchai.

In arriving at the Appraised Values using the Income Capitalisation Approach, the Independent Property Valuer has adopted a ten-year time frame in the projection of cash flows of the New Hotels. The ten-year investment horizon enables an investor to make an assessment of the long-term return that is likely to be derived from the New Hotels given the New Hotels are intended to be held for long-term investment by Regal REIT. This method continues with a set of assumptions as to income (e.g. room rates and occupancy rates) and expenses (e.g. room costs, staff costs, energy costs, management fees, government rents and rates) of the New Hotels and future economic conditions (e.g. inflation rate) in the markets in the ten-year horizon. The

— IFA-28 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER income and expense figures are mathematically extended and are fully dependent upon the accuracy of the assumptions as to incomes, expenses and market conditions. Since both New Hotels are yet to operate, the Independent Property Valuer has projected the cash flows of the New Hotels by making reference to the budget prepared by the Hotel Manager, which is also the hotel manager of the Wanchai Regal iClub Hotel and the Initial Hotel Properties, and their own analysis of relevant general and economic conditions and business prospects of the New Hotels. The net cash flow over the ten-year period is discounted at a rate of 7.25%. The New Hotels are hypothetically assumed to be sold at the end of the ten-year period. The net cash flows of the New Hotels from 11th year onward to the unexpired term of the Government lease are expected to grow at 3.0% per annum and are capitalised at a rate of return of 4.25%, which is determined after taking into account mainly the yields achieved in analysed market sales of hotel premises and the Independent Property Valuer’s knowledge of the market expectations on similar properties. The capitalised future value is discounted at the rate of 7.25%.

We have reviewed and discussed the aforesaid projections of cash flows for the New Hotels with the Independent Property Valuer. We have also examined the historical and projected financials of the Wanchai Regal iClub Hotel as well as the historical Hong Kong hotel industry statistics published by HKTB such as occupancy rates, average room rates, revenue per available room and expense ratios. We note that the assumptions made in the cash flow projections of the New Hotels, in particular the occupancy rates, average room rates and revenue per available room, have reflected the revenue generating ability of the New Hotels and are comparable to the actual results achieved by the Wanchai Regal iClub Hotel after adjusted for the characteristics of each of the Wanchai Regal iClub Hotel and the New Hotels including location, room size, hotel facilities and positioning and target customers. The New Hotels and the Wanchai Regal iClub Hotel are all located on the Hong Kong Island and are within walking distance to MTR stations and accessible by public transportation. Although the average room sizes of the New Hotels are expected to be smaller than that of the Wanchai Regal iClub Hotel, the other operating standards and facilities of the New Hotels will be similar. Target customers will also be comparable among the New Hotels and the Wanchai Regal iClub Hotel, who are looking for right price with good value for money lodging. Based on the above, we are of the view that the assumptions made in the cash flow projections of the New Hotels by the Independent Property Valuer are reasonable and in line with the figures of the Wanchai Regal iClub Hotel and the overall industry.

As a supporting approach, the Direct Comparison Approach is used by the Independent Property Valuer to counter-check the Appraised Values. In this regard, comparable sale and purchase transactions of hotels in Hong Kong around the date of valuation were collected and analysed. The collected comparables were then adjusted to take into account of the discrepancies between the New Hotels and collected comparables, which include the discrepancies in terms of location, age, size and building quality of the New Hotels and the comparables. We have considered and discussed the collected comparables as regard to their characteristics such as location, room size, facilities, other operating standards, positioning and target customers with the Independent Property Valuer.

We have also reviewed, on a best effort basis, the hotel transactions in Hong Kong since September 2011. There were altogether five transactions of hotels (recorded during the period from September 2011 to June 2012) which are, broadly speaking, comparable to the New Hotels

— IFA-29 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(the “Comparable Hotel Transactions”). The considerations paid in the Comparable Hotel Transactions are in the range of approximately HK$6.1 million per room to approximately HK$3.8 million per room with an average of approximately HK$4.8 million. The consideration for the Sheung Wan Hotel (i.e. the SW Hotel Purchase Price) and the North Point Hotel (i.e. the Initial Exercise Price) represent approximately HK$6.4 million per room and approximately HK$4.9 million per room, respectively. Therefore, the pricing per room for the Sheung Wan Hotel is above the maximum and the average of the Comparable Hotel Transactions while that for the North Point hotel is close to the average of the Comparable Hotel Transactions.

However, the Independent Unitholders should note that the Comparable Hotel Transactions were recorded during the second half of 2011 and the first half of 2012, the valuation of which, in our view, may not be fully reflective of the prevailing hotel market conditions, particularly in view of the robust Hong Kong property market during the last year. In this regard, we have reviewed the pricing of the Hong Kong properties in general by making reference to the prices of residential, office and retail properties (given there is no price review for hotel properties) published by the Rating and Valuation Department of Hong Kong. Set out in the table below are the average price index during the period between September 2011 (being the month of the earliest Comparable Hotel Transactions) and June 2012 (being the month of the latest Comparable Hotel Transactions), both months inclusive (the “Comparison Period”), the latest provisional price index and the percentage growth in the relevant property sectors:

The latest The average price provisional price index during the index (as at Percentage Type of property Comparison Period April 2013) increase

Residential 189.5 237.9 25.5% Office 309.6 401.6 29.7% Retail 367.2 499.4 36.0% Average 30.4%

Source: Hong Kong Property Review — Monthly Supplement published in April 2013 and June 2013 by the Rating and Valuation Department of Hong Kong

Despite there being no price index for hotel properties published by the Hong Kong government, we consider the price indices of the three aforesaid property sectors may serve as proxies or, at least, guidelines to the pricing of the hotel property market. As shown in the above table, there has been considerable growth across the three property sectors, ranging from approximately 25.5% to approximately 36.0% with an average of approximately 30.4%, during the Comparison Period. After taking into account such growths, we are of the view that the Appraised Values are within the range of the Comparable Hotel Transactions.

— IFA-30 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5.3 Our view

Based on our discussions with the Independent Property Valuer, our review of the work conducted by the Independent Property Valuer and our own assessment as set out above, we consider that the valuation methodologies, being the Income Capitalisation Approach and counter-checked by the Direct Comparison Approach, and the bases and assumptions adopted by the Independent Property Valuer for the Independent Property Valuation Reports are reasonable and acceptable.

6 Financing plan for the acquisitions

The consideration for the SW Transaction is the SW Hotel Purchase Price of HK$1,580 million (before the Current Assets Adjustment up to HK$1.5 million). The consideration for the NP Transaction will be the Final Exercise Price, which could range from HK$1,300 million to HK$1,825 million (before the Current Assets Adjustment of up to HK$1.5 million). Regal REIT will be required to pay the North Point Hotel Option Fee of HK$10 million, which shall be applied against part of the Final Exercise Price.

Set out below is a summary of the financing plan for the acquisitions.

Consideration Financing Terms and limits

The Deposit of HK$948 The proceeds of the The March 2013 Notes have an million and the Refundable March 2013 Notes aggregate principal amount of Cash Collateral of HK$990 and the May 2013 HK$775 million notes and are million Notes unlisted, unsecured and due 2018 with an interest rate of 4.125% per annum

The May 2013 Notes have an aggregate principal amount of U.S.$150 million and are listed, unsecured and due 2018 with an interest rate of 4.10% per annum

— IFA-31 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Consideration Financing Terms and limits

The Option Fee of HK$10 Internal resources million

Remaining balance of the SW A combination of: Hotel Purchase Price (i.e. (i) bank facilities; (i) bank facilities at target interest excluding the Deposit) of rates of around 2% per annum HK$632 million and the Final and secured against the Sheung Exercise Price (i.e. excluding Wan Hotel and the North Point the Refundable Cash Hotel (as the case maybe) and, Collateral) of HK$650 million if necessary, other assets held (assuming the Final Exercise by Regal REIT Price remains unchanged at HK$1,650 million)

(ii) the Notes (ii) further Notes of up to U.S.$1 issuable under billion (after deducting the the Regal principal amounts of the March REIT MTN 2013 Notes and May 2013 Programme; Notes) to be issued under Regal REIT MTN Programme, which carry market rates and are unsecured

(iii) the Vendor (iii) a Hong Kong dollar two-year Facility; and/or unsecured standby loan facility of up to an aggregate principal amount of HK$1,457 million (which may be drawn down in two tranches), bearing an interest rate of 4.375% per annum, with such interest being payable quarterly. The Vendor Facility will mature and the outstanding principal amount will become repayable 24 months from the date of the draw down

(iv) internal resources

— IFA-32 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Independent Unitholders are reminded that financing plan for the acquisitions is for illustration purposes only. The proportions of aforesaid financing options will only be determined at the time of completion of the SW Transaction and the NP Transaction, respectively, depending on debt and capital market conditions at the time of payments in respect of these transactions are made.

6.1 Timing for payment of the consideration

The expected timing for payment of the consideration is summarised in the chart set out below

Consideration (HK$ million) 1,650 Remaining 1,580 balance of Remaining the Final balance of Exercise the SW Hotel Price of Purchase HK$650 Price million of HK$632 (Note) million

The Refundable Cash The Deposit Collateral of HK$948 of HK$990 million million

Option Fee of HK$10 million Time

Signings of Within two Business Days Completion of Completion of the Share following the satisfaction of the SW the NP Purchase conditions in paragraphs (a) Transaction Transaction Agreement and (b) of sections 3.1.4 (in and the relation to the SW Transaction) Option or in section 3.2.2 (in relation Agreement to the NP Transaction) of the Letter to the Unit holders in this Circular

Note: Assume the Final Exercise Price is equal to the Initial Exercise Price

6.2 The SW Hotel Purchase Price

The Deposit of HK$948 million is intended to be covered by the proceeds of the March 2013 Notes of HK$775.0 million and the proceeds of the May 2013 Notes of U.S.$150.0 million. The balance of the SW Hotel Purchase Price of HK$632 million, representing 40% of the SW Hotel Purchase Price, is intended to be satisfied by (i) proceeds of Notes issued pursuant to the Regal REIT MTN Programme; (ii) existing and/or new bank facilities secured against the Sheung Wan Hotel and/or other assets held by Regal REIT; and/or (iii) Regal REIT’s internal resources.

In the event that Regal REIT is unable to raise adequate funding from the Regal REIT MTN Programme and the bank facilities with terms and conditions to the satisfaction of the Manager before completion, the Manager can draw down on the Vendor Facility to fund the shortfall.

— IFA-33 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

6.3 The Final Exercise Price

The Option Fee of HK$10 million is intended to be financed by the internal resources of Regal REIT and the Refundable Cash Collateral of HK$990 million is intended to be covered by the proceeds of the March 2013 Notes and the May 2013 Notes. The balance of the Final Exercise Price of HK$650 million, representing approximately 39.4% of the Initial Exercise Price (assuming the Final Exercise Price is equal to the Initial Exercise Price), is intended to be satisfied by (i) proceeds of Notes issued pursuant to the Regal REIT MTN Programme; (ii) existing and/or new bank facilities secured against the North Point Hotel and/or other assets held by Regal REIT; (iii) the Option Fee applied against part of the Final Exercise Price; and/or (iv) Regal REIT’s internal resources.

6.4 Financing options

6.4.1 Bank facilities

As the bank facilities will be secured, they are expected to provide a relatively more favourable finance cost compared to unsecured borrowings. As a reference, Regal REIT obtained a three-year term loan facility of HK$4.5 billion (the “Existing Facility”) in March 2012 secured by the Initial Hotel Properties at a floating rate based on HIBOR plus 2.10% per annum. After taking into account the interest rate hedging arrangements, the effective interest rate has been brought down to 2.24% for the year 2012. Accordingly, it is the preference of the Manager to obtain and utilise bank facilities for payment of the remaining balance of the SW Hotel Purchase Price (i.e. excluding the Deposit) and the Final Exercise Price (i.e. excluding the Refundable Cash Collateral), to the extent that bank facilities are available.

The loan-to-value ratio of any new bank facilities that Regal REIT may enter into is expected to be no more than 40% based on the Hong Kong Monetary Authority’s guidelines on mortgage lending. The financing of the remaining balance of the SW Hotel Purchase Price and the Final Exercise Price from drawing down bank facilities secured against the Sheung Wan Hotel and the North Point Hotel, respectively, shall be adequate, unless banks are not willing to lend up to 40% of the value of the New Hotels or, for the North Point Hotel only, the NP Updated Appraised Value is higher than the Initial Exercise Price. In such circumstances, Regal REIT may require bank facilities secured against other assets held by Regal REIT, or unsecured term note issuable under the Regal REIT MTN Programme and/or the Vendor Facility.

The Existing Facility of HK$4.5 billion represents around 22.4% of the latest appraised value of the Initial Hotel Properties of approximately HK$20.1 billion as of 31 December 2012. This suggests there is further room to obtain additional bank facilities with the Initial Hotel Properties. In this regard, we understand the Manager has already initiated exploratory negotiations with bank syndicates to obtain refinancing using certain of the Initial Hotel Properties and the exact terms are not yet finalised as at the Latest Practicable Date.

— IFA-34 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

6.4.2 The Regal REIT MTN Programme

The Regal REIT MTN Programme was established in January 2013 and allows Regal REIT to raise funds from the debt capital market by issuing unsecured notes of up to U.S.$1 billion. Further details relating to the Regal REIT MTN Programme have been set out in announcements of Regal REIT dated 11 January 2013 and 22 May 2013 entitled “Establishment and Proposed Listing of U.S.$1,000,000,000 Medium Term Note Programme” and “Issue and Proposed Listing of Notes under the U.S.$1,000,000,000 Medium Term Note Programme”, respectively.

On 22 March 2013 and 22 May 2013, Regal REIT issued the March 2013 Notes in the principal amount of HK$775.0 million which bears interest at the rate of 4.125% per annum and the May 2013 Notes in principal amount of U.S.$150 million which bears interest at the rate of 4.10% per annum, respectively, under the Regal REIT MTN Programme. The aggregate proceeds from the March 2013 Notes and the May 2013 Notes of HK$1,939.0 million are broadly sufficient for the payments of the Deposit and the Refundable Cash Collateral; while leaving the remaining balance of the considerations for the SW Transaction and the NP Transaction to be raised from bank facilities to the extent that bank facilities are available.

Subject to the then market conditions and the funding requirements, it is the intention of the Manager to raise further funds from the Regal REIT MTN Programme, if required, for payment of the remaining consideration balance (i.e. other than those amounts already raised through the issues of the March 2013 Notes and the May 2013 Notes and to be raised from bank facilities) of the SW Hotel Purchase Price and the Final Exercise Price.

6.4.3 The Vendor Facility

The Vendor Facility is a two-year unsecured standby loan facility with an interest rate of 4.375% per annum. Based on the financing track record of Regal REIT and assuming there are no significant changes in the capital and banking market conditions, the Manager anticipates that the Vendor Facility will carry the highest financing cost among the various financing options. Accordingly, the Vendor Facility can be viewed as a last resort and a temporary financing means for Regal REIT to complete the SW Transaction and/or the NP Transaction, if other financing options with terms and conditions to the satisfaction of the Manager cannot be secured at the time of completion of the respective transactions.

6.5 Our view

The availability of the various financing options discussed above provides the Manager flexibility to optimise the final financing structures for the acquisitions of the New Hotels. The secured bank facilities option is expected to carry the lowest financing cost but negotiations with bank syndicates may take additional time. Subject to market conditions, the Regal REIT MTN Programme provides a more immediate means of unsecured financing. The Vendor Facility, which is the most secured option, can be viewed as a last resort to allow Regal REIT to complete the relevant transactions if other financing options with terms and conditions to the satisfaction of the Manager are not available.

— IFA-35 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on our discussions with the Manager, the target financing structure for the SW Hotel Purchase Price and the Final Exercise Price will be a combination of available bank facilities and the Regal REIT MTN Programme. Based on the terms of the Existing Facility obtained in 2012 and the March 2013 Notes and the May 2013 Notes, the target financing structure is anticipated to carry an average financing cost of approximately 3% per annum, which will be lower than the 5.00%, 5.25% and 5.50% guaranteed return for the first three years of the New Lease Agreements. Even if Regal REIT has to completely rely on the Vendor Facility (save for the HK$775.0 million and the U.S.$150.0 million raised under the Regal REIT MTN Programme in March 2013 and May 2013 respectively) at the interest rate of 4.375% per annum, the gross rental receivable by Regal REIT in the first three years pursuant to the New Lease Agreements still covers the financing cost for the acquisitions of the New Hotels.

Although the Vendor Facility is deemed to carry the highest financing cost among the various financing options at the time being, however Regal REIT may draw down on the Vendor Facility to fund the shortfall if the Manager considers that other financing options with terms and conditions to its satisfaction cannot be secured at the time of completion of the SW Transaction and the NP Transaction, respectively (e.g. other financing options carry interest rates higher than that of the Vendor Facility). The availability of the Vendor Facility will be beneficial for Regal REIT as it provides flexibility to allow Regal REIT to complete the SW Transaction and/or the NP Transaction. In such circumstances, we are also of the view that the terms of the Vendor Facility, including the interest rate, are determined on arm’s length basis.

Based on the above, we are of the view that financing structures for the SW Transaction and the NP Transaction are fair and reasonable and in the interests of Regal REIT and the Independent Unitholders as well as the Unitholders as a whole. We are also of the view that an appropriate mechanism is in place, in which Regal REIT may rely on the Vendor Facility as a back up or, for the NP Transaction only, otherwise opt not to exercise its right to acquire the North Point Hotel under the Option Agreement.

7. New Lease Agreements

As explained in section 1.5 in this letter above, the New Lease Agreements form an integral part of the operations of Regal REIT. Each of the SW Property Company and NP Property Company will, therefore, on completion of the SW Transaction or completion of the NP Transaction (as the case may be), grant to the Lessee leases of the Sheung Wan Hotel and the North Point Hotel pursuant to lease agreements carrying the terms described below.

7.1 Term

— IFA-36 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

7.2 Rent

(a) in respect of the first, second and third years of the lease term, 5.00%, 5.25% and 5.50%, respectively, of the SW Hotel Purchase Price or the Final Exercise Price, as applicable; and

(b) in respect of the remainder of the original lease term and any extensions thereof, such rent (comprising the Base Rent and the Variable Rent) as to be determined based on market rental reviews for each Lease Year performed by an independent professional property valuer jointly appointed by the Lessee and Lessor.

7.3 Early termination

The Lessor shall have the right, among other things, to terminate the relevant New Lease Agreement at any time during the term of the relevant New Lease Agreement by giving six months’ prior written notice to the Lessee but without compensation interest or costs paid by the Lessor to the Lessee.

7.4 Other terms

Other key terms under the New Lease Agreements are set out in sections 3.5 in the Letter to the Unitholders in this Circular. Further analysis on the New Lease Guarantees under the New Lease Agreements is set out in section 8 of this letter.

7.5 Our view

As set out in section 7.1 of this letter above, the initial term of the New Lease Agreements will be approximately five years; and upon the extension of the initial term by the Lessor of a further five years, the term of the New Lease Agreements will be up to approximately 10 years. The initial term of approximately five years is shorter than, and the extended term of up to approximately 10 years is comparable to, the Lease Agreements of the Initial Hotel Properties of 8.75 years expiring in December 2015. We consider the initial term of approximately five years with an option at Lessor’s discretion for extension provides flexibility to the Lessor and, in our view, is favourable to Regal REIT. We also consider the extended term of 10 years is acceptable to Regal REIT, particularly in view of the start-up nature of the New Hotels at the time of entering of the New Lease Agreements. Furthermore, the Lessor will have the discretion to terminate any of the New Lease Agreements by giving six months’ prior written notice to the Lessee. This flexibility, in our view, is beneficial to the Lessor.

The rents payable to the Lessor in respect of the relevant New Lease Agreements are fixed at 5.00%, 5.25% and 5.50% of the SW Hotel Purchase Price and the Final Exercise Price for the first three years, respectively. They are considered to be attractive after considering (i) the estimated average yield of the Initial Hotel Properties, being the rental receivable divided by the

— IFA-37 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

market value, was approximately 3.9% in 2012; and (ii) the estimated yield of the Wanchai Regal iClub Hotel (excluding the retail shop), being the net income receivable divided by the market value (excluding the retail shop), was approximately 3.8% in 2012. Furthermore, accordingly to the Annual Report, the net property income derived from the Initial Hotel Properties in 2012 was approximately HK$922.2 million, representing a gross yield (after hotel management fees calculated at a base fee at 1% of the Gross Revenues plus an incentive fee of 1% of the excess of the Gross Operating Profit over the base fee and the Fixed Charges) of approximately 4.6% based on the market valuation of the Initial Hotel Properties as at 31 December 2012. All in all, the fixed rents of 5.00%, 5.25% and 5.50%, respectively, for the first three years under the New Lease Agreements compare favorably against the aforesaid historical financial returns. Last but not least, the New Hotels are newly developed and have no operating histories. The fixed rents, therefore, are beneficial to the Lessor as such mechanism reduces the start-up risks faced by the Lessor in the early years of operations of the New Hotels.

From the fourth year onwards, the rents will be determined based on market rental reviews performed by an independent professional property valuer. Such arrangement is similar to that of the Initial Hotel Properties, which will determine the levels of base rent, variable rent, FF&E Reserve contributions by the Lessee and the level of security deposits. We consider such mechanism is fair and reasonable.

Based on the above, we consider the terms of the New Lease Agreements are fair and reasonable to the Independent Unitholders, as well as the Unitholders as a whole.

8 New Lease Guarantees

As explained in section 1.5 in this letter above, for the purposes of securing the performance of the Lessee under the New Lease Agreements, the New Lease Guarantees will be entered into by Regal Hotels (as guarantor) to guarantee, among other things, payment of all amounts from time to time owing or payable by the Lessee under the New Lease Agreements.

8.1 Terms of the New Lease Guarantees

Regal Hotels will, at the same time as entering into the relevant New Lease Agreement, enter into the New Lease Guarantee pursuant to which Regal Hotels will guarantee (a) the Lessee’s obligations to pay to the relevant Lessor and the Trustee, on demand by the relevant Lessor or the Trustee (at the direction of the Manager), all amounts (including, without limitation, all rents, other charges and outgoings, interest, default interest, fees and costs) from time to time owing or payable to the relevant Lessor under the relevant New Lease Agreement; and (b) the due observance and performance of all terms, conditions, covenants, agreements and obligations contained in the relevant New Lease Agreement, and on the part of the Lessee, to be observed and performed.

Based on the SW Purchase Price and the guaranteed rent levels of 5.00%, 5.25% and 5.50% for the first three years, the amount of guaranteed rents payable to the Lessor in respect of the Sheung Wan Hotel will be approximately HK$79.0 million, HK$83.0 million and HK$86.9 million, respectively. Similarly, based on the Maximum Final Exercise Price and the guaranteed

— IFA-38 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

rent levels of 5.00%, 5.25% and 5.50% for the first three years, the amount of guaranteed rents payable to the Lessor in respect of the North Point Hotel will be approximately HK$91.3 million, HK$95.8 million and HK$100.4 million, respectively.

8.2 Financial position and results of Regal Hotels

Principal businesses of Regal Hotels have been set out in section 3.5 of this letter above. As set out in the Regal Hotels 2012 Annual Report, Regal Hotels had consolidated NAV (excluding non-controlling interests) of approximately HK$11,735.2 million as at 31 December 2012 and recorded consolidated revenue for the year ended 31 March 2012 of approximately HK$2,330.9 million, the majority of which was generated from the operation and management of the Initial Hotel Properties. The consolidated net profit and consolidated net cash flow from the operating activities of Regal Hotels for the year ended 31 March 2012 were approximately HK$585.8 million and approximately HK$423.3 million, respectively, which were above the annual guaranteed amounts under the New Lease Guarantees.

8.3 Our view

Based on sections 8.1 and 8.2 in the letter above, we consider the New Lease Guarantees are beneficial to Regal REIT and that Regal Hotels has the capability to meet its obligations under the New Lease Guarantees.

9 New Hotel Management Agreements

Similar to the New Lease Agreements and as explained in section 1.5 in this letter, the New Hotel Management Agreements also form an integral part of the operations of Regal REIT. The Lessee, the relevant Lessor, Regal Hotels and the Hotel Manager, will also enter into the New Hotel Management Agreements in respect of each of the Sheung Wan Hotel and the North Point Hotel concurrently with the signing of the relevant New Lease Agreement. The Hotel Manager will be engaged to act as the exclusive operator and manager of the relevant New Hotels to supervise, direct and control the management, operation and promotion of the business of the relevant New Hotels during the operating term of the relevant Hotel Management Agreements.

The Lessor of the relevant New Hotels is a party to the relevant New Hotel Management Agreement since the term of each New Hotel Management Agreement may exceed the corresponding New Lease Agreements if the New Lease Agreements is terminated early or not renewed after the initial terms.

9.1 Operating term

The term of the appointment of the Hotel Manager is 10 years, from the date of signing of the relevant New Hotel Management Agreement, which is generally in line with the New Lease Agreements if the New Lease Agreements are extended for a further five years after the initial terms.

— IFA-39 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

9.2 Operation of the relevant New Hotel

The Hotel Manager is required under the relevant New Hotel Management Agreement to operate the relevant New Hotel solely under the “iclub by Regal (富薈酒店)” hotel brand name and to operate, manage and promote the business of the relevant New Hotel. All hotel employees are to be employees of the Hotel Manager.

9.3 Hotel management fees

The Hotel Manager is entitled to payment by the Owner (i.e. the Lessee or, as the case may be, the Lessor as explained in section 9.5 of this letter below) of hotel management fees comprising of:

(a) a hotel management base fee which is equal to: (i) for so long as the relevant New Lease Agreement is in subsistence, an amount equal to 1% of Gross Revenues; or (ii) in any other cases during the term of the New Hotel Management Agreement, an amount equal to 2% of Gross Revenues; and

(b) a hotel management incentive fee which is equal to: (i) for so long as the relevant New Lease Agreement is in subsistence, an amount equal to 1% of the excess Adjusted GOP over (1) the hotel management base fee; and (2) the Fixed Charges; or (ii) in any other cases during the term of the New Hotel Management Agreement, an amount equal to 5% of the excess of the Adjusted GOP over (1) the hotel management the base fee; and (2) the Fixed Charges.

9.4 Other terms

Other key terms under the New Hotel Management Agreements are set out in section 3.6 of the letter to the Unitholders in this Circular.

9.5 Our view

The term of the New Hotel Management Agreements is 10 years, which is shorter than the hotel management agreements of the Initial Hotel Properties of 20 years but is still generally within the range of the industry practices. We consider such term is acceptable to Regal REIT, particularly in view of the start-up nature of the New Hotels at the time of entering into the New Hotel Management Agreements.

The structure of the hotel management fees (including the “step up” mechanism) of the New Hotel Management Agreements is similar to that of the Initial Hotel Properties. The level of hotel management fees when the relevant New Lease Agreements are in subsistence, however, is irrelevant from Regal REIT’s point of view, since such hotel management fees will be borne by the Lessee. During the term of the New Lease Agreements, the Lessor will only be entitled to the rent under the relevant New Lease Agreements.

— IFA-40 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The “stepped-up” level of hotel management fees will be triggered when the relevant New Lease Agreements are not in subsistence. This will occur when, for example, a New Lease Agreement is terminated early or is not renewed after the initial term. The Lessor will then become the “Owner” of the relevant New Hotel and the Lessor will directly bear the payment of the hotel management fees to the Hotel Manager. Based on the financial performance of Hong Kong hotels as set out in the Hong Kong Hotel Industry Survey for each of 2009, 2010 and 2011 (the “Hong Kong Hotel Industry Surveys”) jointly produced by HKTB and a consultancy firm, we note that the amount of hotel management fees chargeable under the “stepped-up” level of hotel management fees pursuant to the New Hotel Management Agreements is generally in line with the industry levels. This “stepped-up” level of hotel management fees is also the same as the current hotel management fees for the Wanchai Regal iClub Hotel.

Based on the above, we are of the view that the terms of the New Hotel Management Agreements (including the hotel management fees structure) are fair and reasonable to the Independent Unitholders.

10 Financial impact on Regal REIT and the Independent Unitholders upon completion of the SW Transaction and/or NP Transaction

Upon completion of the SW Transaction and the NP Transaction (if the North Point Hotel Option is exercised), the SW Target Group (including the Sheung Wan Hotel) and the NP Target Group (including the North Point Hotel) will be wholly owned by Regal REIT and they will be consolidated into the financial statements of Regal REIT. As such, the financial results of the SW Target Group and the NP Target Group will be consolidated into the income statement of Regal REIT. Regal REIT’s earnings, therefore, will be enhanced by the rents receivable under the New Lease Agreements, after deducting the relevant expenses.

Independent Unitholders should note that the following discussion of the financial effects of the SW Transaction and the NP Transaction on Regal REIT and the Independent Unitholders is based on the illustrative scenario provided in respect of the pro forma financial information of the Enlarged Group in appendix 3 to the Circular, which is mainly based on the following assumptions:

• completion of the SW Transaction and the NP Transaction took place on 31 December 2012 for the unaudited pro forma consolidated statement of financial position of the Enlarged Group;

• completion of the SW Transaction and the NP Transaction took place on 1 January 2012 for the unaudited pro forma consolidated income statement of the Enlarged Group;

• the entering into of the New Lease Agreements and the New Hotel Management Agreements upon the respective completion of the SW Transaction and the NP Transactions on the corresponding completion dates; and

— IFA-41 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• the SW Hotel Purchase Price and the Final Exercise Price were funded entirely by debt (i.e. from a combination of the issuance of the Notes, the amounts drawn down under bank facilities and/or the Vendor Facility).

As the detailed terms of the financing arrangements for the SW Transaction and the NP Transaction have not been finalised as at the Latest Practicable Date, the discussion of the financial effects of the SW Transaction and the NP Transaction may or may not be accurate or necessarily reflect the true picture of the financial position or operating results of the Enlarged Group following completion of the SW Transaction and/or the NP Transaction.

10.1 Earnings and distributable income

The pro forma financial effects of the SW Transaction and the NP Transaction on the earnings and distributions for the year ended 31 December 2012, as if Regal REIT had completed the SW Transaction and/or the NP Transaction on 1 January 2012, are as follows:

For the year ended 31 December 2012 Actual Pro forma Pro forma Pro forma (audited) The Regal Enlarged Enlarged Enlarged REIT Group Group after Group after Group after completion of completion of completion of the SW the NP both the SW Transaction Transaction Transaction and the NP Transaction

Profit for the year, before 3,548.8 3,553.6 3,554.0 3,558.8 distribution to the Unitholders (HK$ million) Distributable income (HK$ 464.7 465.5 465.7 466.6 million) Distributable income per Unit 0.1426 0.1429 0.1430 0.1432 (HK$) (Note)

Note: The distributable income per Unit is calculated based on 3,257,431,189 Units in issue as at the Latest Practicable Date.

Pursuant to the terms of the New Lease Agreements, the rents payable by the Lessee in respect of the relevant leases shall be 5.00%, 5.25% and 5.50% of the SW Hotel Purchase Price (for the Sheung Wan Hotel) or the Final Exercise Price (for the North Point Hotel) for the first, second and third years of the term, respectively. The rent payable in subsequent years will be determined based on market rental reviews performed by an independent professional property valuer. Based on the SW Hotel Purchase Price of HK$1,580 million, the rentals receivable by Regal REIT will be HK$79.00 million, HK$82.95 million and HK$86.90 million for the first, second and third

— IFA-42 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER years, respectively. Assuming the Final Exercise Price for the North Point Hotel is HK$1,650 million (i.e. the NP Initial Appraised Value), the rentals receivable by Regal REIT will be HK$82.50 million, HK$86.625 million and HK$90.75 million for the first, second and third years, respectively.

It is the intention of the Manager to finance the SW Hotel Purchase Price and the Final Exercise Price principally by (i) the proceeds of Notes issued pursuant to the Regal REIT MTN Programme; and/or (ii) bank facilities; and, in the event of any shortfall from these financing options, (iii) the Vendor Facility.

Assuming there are no material adverse changes in the conditions of the capital and credit markets at any time before completion of the SW Transaction and the NP Transaction and based on the above, the Manager anticipates that, as set out in the pro forma accounts of the Enlarged Group in appendix 3 to the Circular, Regal REIT will be able to raise sufficient funds at an average financing cost lower than the rentals receivable under the New Lease Agreements. In such circumstances, the pro forma net profit will increase by approximately HK$4.8 million and HK$5.2 million, the pro forma distributable income will increase by approximately HK$0.9 million and HK$1.1 million and the pro forma distributable income per Unit will increase by approximately HK$0.003 and HK$0.004 for the SW Transaction and the NP Transaction respectively.

In addition, the payments of the Deposits and the Refundable Cash Collateral to P&R will also allow Regal REIT to earn interest income of 4.3047% per annum from the date of payment to the completion of the respective transactions. Such interest income has not yet been taken into consideration in the pro forma distributable income owing to the fact that the duration of interest earning period cannot be pre-determined at the Latest Practicable Date.

The Independent Unitholders should note that transaction related costs, mainly comprising the one-off REIT Manager’s acquisition fees, of approximately HK$18.5 million and HK$19.2 million for the SW Transaction and the NP Transaction, respectively, were charged to arrive at the above pro forma figures. The one-off expenses have therefore reduced the enhancements in earnings and distributable income in the year of completion of the SW Transaction and the NP Transaction. If such expenses were excluded, the earnings and distributable income of Regal REIT will be further enhanced.

In the event that Regal REIT is unable to raise sufficient funds from either the Regal REIT MTN Programme or bank facilities for payment of the remaining balance of the considerations for the SW Transaction and the NP Transaction, the Manager can still complete the transactions by utilising the Vendor Facility. We have further reviewed the incremental financial effects of the Enlarged Group for the first three years in such circumstances. We note that there will continue to be enhancements in both earnings and distributable income of the Enlarged Group as a result of completion of each of the SW Transaction and the NP Transaction in the overall three-year period unless the overall financing costs exceeds approximately 4.3% per annum (i.e. when the remaining consideration for the transactions, excluding the Deposit and/or the Refundable Cash Collateral (as the case maybe), were almost entirely funded by the Vendor Facility).

— IFA-43 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

All in all, save for the future valuation gains/losses of the New Hotels to be recorded in the consolidated income statement of Regal REIT, it is expected that the SW Transaction and the NP Transaction will result in distributable income accretion to Regal REIT and the Unitholders during the three-year period from completion of the SW Transaction and the NP Transaction.

10.2 Net assets

The pro forma financial effects of the SW Transaction and the NP Transaction on the NAV per Unit as at 31 December 2012, as if Regal REIT had completed the SW Transaction and/or the NP Transaction on 31 December 2012, are as follows:

As at 31 December 2012 Actual Pro forma Pro forma Pro forma (audited) The Regal Enlarged Enlarged Enlarged REIT Group Group after Group after Group after completion of completion of completion of the SW the NP both the SW Transaction Transaction Transaction and the NP Transaction

NAV (HK$ million) 15,931.0 15,912.6 15,911.9 15,893.4 NAV per Unit attributable to 4.891 4.885 4.885 4.879 the Unitholders (HK$) (Note)

Note: The NAV per Unit attributable to the Unitholders is calculated based on 3,257,431,189 Units in issue as at the Latest Practicable Date.

The audited net assets attributable to the Unitholders were approximately HK$15,931.0 million as at 31 December 2012. Based on the 3,257,431,189 Units in issue as at the Latest Practicable Date, the audited NAV per Unit attributable to the Unitholders was HK$4.891, representing a premium of approximately 118.3% over the closing Unit price of HK$2.24 as at the Latest Practicable Date.

The Sheung Wan Hotel will be acquired at the SW Hotel Purchase Price, which will be equivalent to the SW Appraised Value. Assuming the North Point Hotel Option is exercised, the North Point Hotel will be acquired at the Final Exercise Price, which will be, depending on the NP Updated Appraised Value, equivalent to or less than the NP Updated Appraised Value.

Assuming there will be no significant changes in the fair values (as compared to their respective Appraised Values) of the Sheung Wan Hotel and the North Point Hotel on completion of the SW Transaction and the NP Transaction, respectively, and given both the SW Transaction and the NP Transaction will be primarily financed by debt (i.e. no new Units will be issued), completion of the SW Transaction and the NP Transaction are generally NAV neutral and not expected to have

— IFA-44 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

any material adverse impact on the NAV of Regal REIT attributable to the Unitholders or any material dilution to the Unitholders. However, due to the one-off transaction related expenses as mentioned in section 10.1 of this letter above, there are slight decreases in the pro forma NAV and pro forma NAV per Unit as shown in the table above. Nonetheless, we have further reviewed, based on the assumptions as set out in the pro forma accounts, the incremental financial effects of the Enlarged Group for the first three years (since the rents for the first three years are fixed under the New Lease Agreements). We note that the aforesaid reduction in the NAV and NAV per Unit at completion will be generally recovered from the enhancements in the earnings within a three-year period.

If the North Point Hotel is acquired at a discount to the NP Updated Appraised Value (i.e. the NP Updated Appraised Value is higher than the NP Initial Appraised Value), Regal REIT will record the North Point Hotel at the NP Updated Appraised Value in the consolidated balance and a valuation gain equivalent to the difference between the Final Exercise Price and the NP Updated Appraised Value in its consolidated income statement. In such circumstances, the NAV of Regal REIT will increase by, among others, such valuation gain up to an amount of HK$175 million (being the Maximum NP Updated Appraised Value of HK$2,000 million less the Maximum Final Exercise Price of HK$1,825 million). Based on 3,257,431,189 Units in issue as at the Latest Practicable Date, the NAV per Unit attributable to the Unitholders will enhance by up to approximately HK$0.054 or 1.1% of the NAV per Unit as at 31 December 2012.

Following completion of the SW Transaction and the NP Transaction (if the North Point Hotel Option is exercised), the New Hotels, similar to the Initial Hotel Properties, will be accounted for as investment properties of Regal REIT. Their values will be stated at fair value, which reflects market conditions, at the end of each reporting period. Any changes in the fair values of the New Hotels in future will directly affect the NAV of Regal REIT attributable to the Unitholders.

10.3 Gearing and cash flow

As mentioned in the section 10.1 in this letter, it is the intention of the Manager to finance the SW Hotel Purchase Price and the Final Exercise Price principally by (i) the proceeds of Notes issued pursuant to the Regal REIT MTN Programme; and/or (ii) bank facilities. Therefore, it is expected that the gearing of Regal REIT will increase upon completion of the SW Transaction

— IFA-45 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER and the NP Transaction. The pro forma financial effects of the SW Transaction and the NP Transaction on gearing of Regal REIT as at 31 December 2012, as if Regal REIT had completed the SW Transaction and/or the NP Transaction on 31 December 2012, are as follows:

As at 31 December 2012 Actual Pro forma Pro forma Pro forma The Regal Enlarged Enlarged Enlarged REIT Group Group after Group after Group after completion of completion of completion of the SW the NP both the SW Transaction Transaction Transaction and the NP Transaction

Total debt (HK$ million) 4,834.6 6,356.1 6,426.1 8,006.1 Total capitalisation 20,765.6 22,268.7 22,338.0 23,899.5 (HK$ million) Gearing ratio 22.9% 28.5% 28.8% 33.5%

The gearing ratios above are still well below the maximum 45% permitted under the REIT Code and other thresholds allowed under various banking facilities agreements.

As at 31 December 2012, Regal REIT had total cash resources of approximately HK$69.6 million, comprising HK$25.4 million in unrestricted and HK$44.2 million in restricted cash balances and bank deposits. In addition, funds of approximately HK$1,939.0 million in aggregate were raised by the issues of the March 2013 Notes and the May 2013 Notes. Based on our discussions with the Manager, such amounts will be available for the payment of the Deposit of HK$948 million for the SW Transaction and the Refundable Cash Collateral of HK$990 million for the NP Transaction. As adequate funding (i.e. (i) the proceeds of Notes issued pursuant to the Regal REIT MTN Programme; and/or (ii) bank facilities; and, in the event of any shortfall from the above financing options, (iii) the Vendor Facility) will be available for the payment of the aggregate consideration for the SW Transaction and the NP Transaction at their respective completion, we are of the view that Regal REIT possesses sufficient financial resources and working capital for completion of both the SW Transaction and the NP Transaction.

In the event that Regal REIT has failed to secure adequate financing from bank facilities and/or the Regal REIT MTN Programme with terms and conditions to the satisfaction of the Manager, as mentioned in section 6.5 of this letter above, Regal REIT may rely on the Vendor Facility as a back up or, for the NP Transaction only, otherwise opt not to exercise its right to acquire the North Point Hotel under the Option Agreement.

— IFA-46 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

11 Continuing Connected Transactions

11.1 Background

Upon and after completion of the SW Transaction and (assuming the North Point Hotel Option has been exercised) the NP Transaction, members of the Regal REIT Group will enter into transactions with members of the Regal Connected Persons Group in relation to the New Lease Agreements, the New Lease Guarantees and the New Hotel Management Agreements in respect of each of the Sheung Wan Hotel and the North Point Hotel. The transactions contemplated under these agreements and documentations are the Additional Continuing Connected Transactions.

Accordingly, the Manager has requested that the SFC grant the New CCT Waiver Application. The Manager will seek approval of the Independent Unitholders at the EGM on the New CCT Waiver Application and the agreements pertaining thereto (being the New Lease Agreements, New Lease Guarantees and New Hotel Management Agreements).

11.2 Additional Continuing Connected Transactions

11.2.1 New Lease Agreements

Key terms of the New Lease Agreements have been set out in section 3.5 of the Letter to the Unitholders in the Circular and section 7 of this letter above.

We have identified and examined certain comparable transactions involving the entering into of lease agreements and hotel management agreements by hotel operators in Hong Kong and overseas, hotel REIT and hospitality trust in Hong Kong and hospitality trusts in Singapore (the “Comparable Transactions”). The trusts comprise Regal REIT and Langham Hospitality Investments and Langham Hospitality Investments Limited listed in Hong Kong, CDL Hospitality Trusts, Far East Hospitality Trust and Ascendas Hospitality Trust listed in Singapore. We are of the view that the transactions entered into by the hospitality trusts in Singapore are comparable after considering, among other things, the proximity of the locations and similar nature of the underlying assets and the similarity of the operating structure of the hospitality trusts as compared to that of Regal REIT.

— IFA-47 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The rents of the Initial Hotel Properties payable to Regal REIT have been determined based on market rental reviews, which consisted of base rents and variable rents, performed by an independent professional property valuer while the rest of the Comparable Transactions largely comprise a base rent plus an incentive rent based on the financial performance of the relevant hotels. The rents payable to the Lessor in respect of the relevant New Lease Agreements are fixed at 5.00%, 5.25% and 5.50% of the SW Hotel Purchase Price and the Final Exercise Price for the first three years, respectively. They are considered to be attractive after considering (i) the estimated average yield of the Initial Hotel Properties, being the rental receivable divided by the market value, was approximately 3.9% in 2012; and (ii) the estimated yield of the Wanchai Regal iClub Hotel (excluding the retail shop) currently held by Regal REIT, being the net income receivable divided by the market value (excluding the retail shop), was approximately 3.8% in 2012; and (iii) the New Hotels will just start up and have no operating histories. From the fourth year onwards, the rents will be determined based on market rental reviews performed by an independent professional property valuer.

Furthermore, the Lessor will have the discretion to terminate any of the New Lease Agreements by giving six months’ prior written notice to the Lessee. This flexibility, in general, is more favourable than the Comparable Transactions.

The Lessee shall, during the first three years of each New Lease Agreement, maintain with the Lessor a security deposit equivalent to three months’ rental, rates and Government rent in respect of the relevant New Hotel. The amount of the aforesaid security deposit is within the range of the Comparable Transactions and, in our view, acceptable after taking into account the guarantees given under the New Lease Guarantees. The amount of security deposit in the remaining years of each New Lease Agreement will be the higher of (i) the amount of which an independent professional property valuer jointly appointed by the Lessor and the Lessee determines to be the market rate of deposit upon market rental review; and (ii) three months’ Base Rent, rates and Government rent.

As stated in the Letter to the Unitholders in this Circular, the Independent Property Valuer has confirmed that, in its opinion, among other things, the New Lease Agreements associated with the SW Transaction and the NP Transaction are on normal commercial terms and consistent with normal business practices for contracts of the relevant type and at the prevailing market levels, except for the rents payable for the first three Lease Years which are above market level. We have reviewed the terms of the New Lease Agreements and discussed with the Independent Property Valuer and we concur with the view of the Independent Property Valuer as set out above. We are also of the view that the transactions contemplated under the New Lease Agreements are in the ordinary and usual course of business, on terms determined at arm’s length basis, fair and reasonable and in the interests of Regal REIT and the Independent Unitholders.

— IFA-48 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

11.2.2 New Lease Guarantees

Key terms of the New Lease Guarantees have been set out in section 3.5.6 of the Letter to the Unitholders in the Circular and section 8 of this letter above.

As mentioned in section 8 of this letter above, Regal Hotels will, at the same time as entering into the relevant New Lease Agreements, enter into the New Lease Guarantees pursuant to which Regal Hotels will guarantee, among other things, the Lessee’s obligations to pay to the relevant Lessor and the Trustee all amounts from time to time owing or payable to the relevant Lessor under the relevant New Lease Agreement.

Similar to the New Lease Agreements, the Independent Property Valuer has confirmed that, in its opinion, among other things, the New Lease Guarantees (being transactions contemplated under the New Lease Agreements associated with the SW Transaction and the NP Transaction) are on normal commercial terms and consistent with normal business practices for contracts of the relevant type and at the prevailing market levels. We have reviewed the terms of the New Lease Guarantees and discussed with the Independent Property Valuer and we concur with the view of the Independent Property Valuer as set out above. We are also of the view that the transactions contemplated under the New Lease Guarantees are in the ordinary and usual course of business, on terms determined at arm’s length basis, fair and reasonable and in the interests of Regal REIT and the Independent Unitholders.

Furthermore, similar guarantees were given by related companies of the relevant lessees in certain Comparable Transactions, including the Lease Guarantees in respect of the Initial Hotel Properties. In light of this, we are of the view that the terms of the New Lease Guarantees are comparable with market practices and are beneficial to Regal REIT.

11.2.3 New Hotel Management Agreements

Key terms of the New Hotel Management Agreements have been set out in section 3.6 of the Letter to the Unitholders in the Circular and section 9 of this letter above.

The term of the appointment of the Hotel Manager is 10 years, from the date of signing of the relevant New Hotel Management Agreement. This is generally in line with the Comparable Transactions, including the Hotel Management Agreements in respect of the Initial Hotel Properties, with initial terms ranging from 3 years to 50 years.

As discussed in sections 9.3 and 9.5 of this letter above, when the Lessor becomes the “Owner” of the Hotel under any of the New Hotel Management Agreements, the Hotel Manager is entitled to payment of hotel management fees by the Lessor comprising a base fee, which is equal to 2% of Gross Revenues; and an incentive fee, which is equal to 5% of the Adjusted GOP over (1) the base fee; and (2) the Fixed Charges.

— IFA-49 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on our reviews of the Comparable Transactions, including the Hotel Management Agreements in respect of the Initial Hotel Properties, we note that management fee structures of hotel managers were in various forms. Typical structures comprised a base fee, ranging from 2.0% to 3.5% of gross revenue, plus an incentive fee, ranging from 0.0% to 8.0% of gross operating profit.

Based on our reviews of the Comparable Transactions and the financial performance of Hong Kong hotels as set out in the Hong Kong Hotel Industry Surveys and taking into account the management services required, we note that the level and structure of hotel management fees chargeable under the New Hotel Management Agreements are generally comparable with that of the Comparable Transactions (both including and excluding the Hotel Management Agreements in respect of the Initial Hotel Properties) and the industry.

Furthermore, similar to the New Lease Agreements and the New Lease Guarantees, the Independent Property Valuer has confirmed that, in its opinion, among other things, the New Hotel Management Agreements associated with the SW Transaction and the NP Transaction are on normal commercial terms and consistent with normal business practices for contracts of the relevant type and at the prevailing market levels, except for the hotel management fees, for so long as the New Lease Agreements are in subsistence, which are below market level. We have reviewed the terms of the New Hotel Management Agreements and discussed with the Independent Property Valuer and we concur with the view of the Independent Property Valuer as set out above. We are also of the view that the transactions contemplated under the Hotel Management Agreements are in the ordinary and usual course of business, on terms determined at arm’s length basis, fair and reasonable and in the interests of Regal REIT and the Independent Unitholders.

11.3 Our view

Based on our review and work above in this section, we are of the view that:

(ii) each of the Additional Continuing Connected Transactions to be entered into upon and after completion of the SW Transaction and/or the NP Transaction shall be: (1) in the ordinary and usual course of business of Regal REIT; (2) on terms which are normal commercial terms, at arm’s length and are fair and reasonable and in the interests of the Independent Unitholders, as well as the Unitholders as a whole.

— IFA-50 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

12 Risk factors

The Independent Unitholders may wish to bear in mind the following summarised risk factors when considering the SW Transaction and the NP Transaction:

(i) There are risks and uncertainties as the Sheung Wan Hotel and the North Point Hotel are currently under development;

• The completed New Hotels may be inconsistent with the specifications provided in the Share Purchase Agreement or the Option Agreement;

• The due diligence survey on the New Hotels prior to completion of the SW Transaction or the NP Transaction may not have identified all material defects, breaches of laws and regulations and other deficiencies;

• Regal REIT may not be able to enter into New Lease Agreements and New Hotel Management Agreements in the future on similar terms;

(ii) Regal REIT is not fully insulated from the risks associated with the hotel industry despite the structure of the New Lease Agreements;

(iii) The Manager’s ability to effectively monitor the obligations of the Hotel Manager under the New Hotel Management Agreements and to actively manage the New Hotels is limited;

(iv) The Interior Fit-Out Programmes involves fit-out work which may not be completed on schedule;

(v) The New Hotels have no operating history so Unitholders and prospective investors should be aware that there may be initial start-up risks associated with each of the New Hotels;

(vi) There are risks to leveraging and limitations on Regal REIT’s ability to leverage; and

(vii) Failure by P&R, the Guarantors and/or other counterparties to fulfill their obligations under the SW Transaction Documents and/or the NP Transaction Documents, such as any failure to refund the Deposit and the Refundable Cash Collateral which are not held in escrow, may have a material adverse effect on Regal REIT’s operations.

Details of the above risk factors are set out in the section 8 headed “Risk factors” of the Letter to the Unitholders in the Circular.

— IFA-51 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

DISCUSSION AND ANALYSIS

Regal REIT’s and the Manager’s primary objectives are to provide long-term stable, growing distributions and capital growth for Unitholders through (i) internal growth through asset enhancement opportunities and operational improvements; (ii) external growth through potential acquisitions that meet the Manager’s investment criteria; and (iii) financing through an appropriate capital structure. Since 2009, Regal REIT has experienced a significant growth in average room rate at its Initial Hotel Properties. The compounded annual growth rate of Regal REIT’s average room rate for the Initial Hotel Properties from 2009 to 2012 was approximately 11%. The average occupancy rate of Regal REIT’s hotel portfolio also reached to over 90% in both 2011 and 2012. We consider there is a limitation for further organic growth by way of maximising room rates and occupancy levels in Regal REIT’s existing hotel portfolio in the future. With high barriers of entry of investing in hotel market and a generally positive outlook of tourism sector and hotel market, we therefore consider the Manager’s strategy to achieve the primary objectives of providing long-term stable, growing distributions and capital growth for Unitholders and to grow Regal REIT’s hotel portfolio through the proposed transactions is reasonable. The New Hotels are proposed to be branded as “iclub by Regal (富薈酒店)”, being the same as the Wanchai Regal iClub Hotel, which has generated a higher net profit margin as compared to the Initial Hotel Properties. Upon completion, Regal REIT will have a more balanced hotel portfolio by having five traditional hotels and three select-service hotels and the enhancements in the overall profitability of the portfolio of hotels.

We also consider adopting a similar leasing and management structure of the Initial Hotel Properties for the New Hotels, i.e. the entering into of the New Lease Agreements, the New Lease Guarantees and the New Hotel Management Agreements, is reasonable as (i) the master lease and guarantee structure provides a generally stable rental income stream to Regal REIT and its Unitholders against the more cyclical nature of hotel revenue as well as the uncertainty of the start-up nature of the New Hotels while it also gives Regal REIT a share of upside in the form of variable rent from the fourth year onwards; and (ii) the operation of the New Hotels under the “iclub by Regal (富薈酒店)” brand is consistent with the investment policy and strategy of Regal REIT which will continue to enhance the brand name of “iclub by Regal (富薈酒店)” since the full operation of the Wanchai Regal iClub Hotel in December 2010.

The acquisition of the Sheung Wan Hotel is by way of a definitive sale and purchase agreement while the acquisition of the North Point Hotel is under an option arrangement. We consider it is fair to enter into a definitive agreement for the acquisition of Sheung Wan Hotel as (i) completion of the construction of Sheung Wan Hotel is scheduled to be in the fourth quarter of 2013; (ii) Regal REIT already secured the financing of the Deposit of HK$948 million through issues of the March 2013 Notes which carry an annual interest cost of 4.125% and the May 2013 Notes which carry an annual interest cost of 4.10%; and (iii) the payment of the Deposit to P&R will accrue interest income for Regal REIT at the rate of 4.3047% per annum. On the other hand, the North Point Option provides Regal REIT the flexibility to arrange necessary financing prior to entering into the definitive sale and purchase agreement. The payment by Regal REIT of cash collateral of 60% of the NP Initial Appraised Value of HK$1,650 million to P&R for the acquisition of the North Point Hotel also accrues interest income at the rate of 4.3047% per annum. Because the North Point Hotel Option secures the opportunity for Regal REIT to acquire the North Point Hotel and there exists an adjustment mechanism of the Final Exercise Price where any downward adjustment will be fully adjusted for and any upward

— IFA-52 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER adjustment is limited to the simple average of the NP Updated Appraised Value and the NP Initial Appraised Value and the Option Fee shall be applied against part of the Final Exercise Price upon completion of the NP Transaction, we consider entering into the Option Agreement and payment of the Hotel Option Fee of HK$10 million to be fair and reasonable.

The SW Purchase Price of the Sheung Wan Hotel is HK$1,580 million and the Initial Exercise Price of the North Point Hotel is HK$1,650 million, both of which are equal to the market valuations as estimated by the Independent Property Valuer on an as-completed basis. The Income Capitalisation Approach, counter-checked by the Direct Comparison Approach, is the valuation methodology used in arriving at the Appraised Values, which is the same methodology used for valuations of the Initial Hotel Properties and the Wanchai Regal iClub Hotel. The valuations of the New Hotels are also comparable with the Comparable Hotel Transactions after taking into account property price increases in general during the Comparison Period.

Due to Regal REIT’s policy of distributing no less than 90% of its total distributable income for each financial year, Regal REIT does not maintain significant amounts of cash reserves. Equity financing is also not a favorable option as the discount of the prevailing trading unit price to the net asset value of Regal REIT is over 50%. Therefore, the Manager intends to finance the SW Hotel Purchase Price and the Final Exercise Price, and the Current Assets Adjustments in relation thereto, from a combination of bank facilities and the Regal REIT MTN Programme, which are anticipated to carry an average financing cost below the guaranteed rental income for the first three years. The availability of the various financing options discussed in section 6 in this letter above provides the Manager flexibility to optimise the final financing structure for the acquisition of the New Hotels. The secured bank facilities option is expected to carry the lowest financing cost but negotiations with bank syndicates may take additional time. Subject to market conditions, the Regal REIT MTN Programme provides a more immediate means of unsecured financing. The Vendor Facility, which is the most secured option, can be viewed as a last resort to allow Regal REIT to complete the relevant transactions if other financing options with terms and conditions to the satisfactions of the Manager are not available.

The fixed rentals under the New Lease Agreements carry at escalating rates of 5.00%, 5.25% and 5.50% yields for the first three years, respectively. They are considered to be attractive after considering (i) the estimated average yield of the Initial Hotel Properties, being the rental receivable divided by the market value, was approximately 3.9% in 2012; and (ii) the estimated yield of the Wanchai Regal iClub Hotel (excluding the retail shop), being the net income receivable divided by the market value (excluding the retail shop), was approximately 3.8% in 2012. Furthermore, accordingly to the Annual Report, the net property income derived from the Initial Hotel Properties in 2012 was approximately HK$922.2 million, representing a gross yield (after hotel management fees) of approximately 4.6% based on the market valuation of the Initial Hotel Properties as at 31 December 2012. All in all, the fixed rents of 5.00%, 5.25% and 5.50%, respectively, for the first three years under the New Lease Agreements compare favorably against the aforesaid historical financial returns. Last but not least, the New Hotels are newly developed and have no operating histories. The fixed rents, therefore, are beneficial to the Lessor as such mechanism reduces the start-up risks faced by the Lessor in the early years of operation of the New Hotels. Rentals receivable by Regal REIT from fourth year

— IFA-53 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER and onwards will be determined based on market rental reviews performed by an independent professional property valuer. We consider such mechanism is fair and reasonable. In any event, the Lessor will have the discretion to terminate any of the New Lease Agreements by giving six months’ prior written notice to the Lessee. This flexibility is also beneficial to Regal REIT.

Future lease payments payable by the Lessee are guaranteed by Regal Hotels which should have sufficient financial capabilities to back up the obligations of the Lessee. During the term of the relevant New Lease Agreements, the terms of the New Hotel Management Agreements are, in our view, irrelevant from Regal REIT’s perspective as the hotel management services and the corresponding payments are dealings between the Lessee (as the “Owner” of the New Hotels) and the Hotel Manager, which are both wholly owned by Regal Hotels. In the event of the Lessor becomes the “Owner” of the New Hotels (i.e. when any of the New Lease Agreements is terminated early or not renewed after the expiry of the initial term) and is required to pay the hotel management fees to the Hotel Manager directly, the “stepped-up” level of such hotel management fees is also in line with market.

Despite the one-off transaction expenses will temporarily reduce the NAV in the first year, completion of the SW Transaction and the NP Transaction are expected to result in accretion to both distributable income of approximately 7.6% per year and NAV of approximately 0.7% during the first three-year period of Regal REIT (assuming the average financing cost will be approximately 3% per annum and the Final Exercise Price will be equal to the Initial Exercise Price for the North Point Hotel). The 100% debt financing structure for the proposed transactions will inevitably create a higher but, in our view, still manageable gearing ratio, which will continue to be well below the maximum 45% permitted under the REIT Code and other thresholds allowed under various banking facilities covenants. The payment of the Deposit of HK$948 million and the Refundable Cash Collateral of HK$990 million can be generally covered by the proceeds from the March 2013 Notes and the May 2013 Notes. Regal REIT is only required to pay the remaining balances of the SW Transaction and the NP Transaction at completion of the respective transactions. In the event that Regal REIT is unable to raise adequate funding from the Regal REIT MTN Programme and/or the bank facilities with terms and conditions to the satisfaction of the Manager before completion, the Manager can opt to draw down the Vendor Facility to fund the shortfall or, for the NP Transaction only, otherwise opt not to exercise the North Point Hotel Option in accordance to the terms of the Option Agreement.

The Additional Continuing Connected Transactions, being the transactions contemplated under the New Lease Agreements, the New Lease Guarantees and the New Hotel Management Agreements, are essential and an integral part of the proposed acquisitions. The terms of the Additional Continuing Connected Transactions are generally in line with market practices.

— IFA-54 — LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

OPINION AND RECOMMENDATION

Having considered the above reasons and factors, we consider that

(3) the Vendor Facility: (i) is at arm’s length on normal commercial terms, fair and reasonable, and in the ordinary and usual course of business of Regal REIT, consistent with the investment objectives and strategy of Regal REIT and in the interests of Independent Unitholders, as well as the Unitholders as a whole; and (ii) has an interest rate that is not higher than the prevailing commercial rate for unsecured term loans of a similar size and term; and

(4) the New CCT Waiver Application is fair and reasonable having regard to the interests of Regal REIT, the Independent Unitholders, as well as the Unitholders as a whole; and the Additional Connected Transactions are: (i) being entered into in the ordinary and usual course of business of Regal REIT; and (ii) consistent with investment objectives and strategy of Regal REIT; and (iii) on terms which are normal commercial terms at arm’s length and are fair and reasonable and in, and not prejudicial to, the interests of Regal REIT, the Independent Unitholders, as well as the Unitholders as a whole.

Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, Independent Unitholders to vote in favour of the Transaction Matters Requiring Approval at the EGM.

Yours faithfully, for and on behalf of SOMERLEY LIMITED Kenneth Chow Managing Director — Corporate Finance

— IFA-55 — APPENDIX 1 FINANCIAL INFORMATION OF REGAL REIT

The financial information of Regal REIT for the past three financial years has been published in the reports as follows:

(1) the financial information of Regal REIT for the year ended 31 December 2012 is disclosed in the annual report of Regal REIT for the year ended 31 December 2012 published on 11 April 2013, from pages 49 to 94;

(2) the financial information of Regal REIT for the year ended 31 December 2011 is disclosed in the annual report of Regal REIT for the year ended 31 December 2011 published on 11 April 2012, from pages 48 to 100;

(3) the financial information of Regal REIT for the year ended 31 December 2010 is disclosed in the annual report of Regal REIT for the year ended 31 December 2010 published on 6 April 2011, from pages 48 to 98.

All of the above annual and interim reports of Regal REIT have been published on the website of the Stock Exchange (www.hkex.com.hk) and the website of Regal REIT (www.regalreit.com).

— A1-1 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE 1(i),2(z)(iii) SW TARGET COMPANY AND THE NP TARGET COMPANY

A. Accountants’ Report in respect of the SW Target Company

The following is the text of a report, prepared for the purpose of inclusion in this Circular, from Ernst & Young, Certified Public Accountants.

22/F CITIC Tower 1 Tim Mei Avenue Central, Hong Kong

29 June 2013

The Directors Regal Portfolio Management Limited (in its capacity as manager of Regal Real Estate Investment Trust) Unit No. 1504, 15th Floor 68 Yee Wo Street Causeway Bay Hong Kong

Dear Sirs

We set out below our report on the financial information of Plentiful Investments Limited (the “SW Target Company”) and its subsidiary, Tristan Limited (the “SW Property Company”) (hereinafter collectively referred to as the “SW Target Group”) comprising the consolidated statements of comprehensive income and consolidated statements of changes in equity for each of the years ended 31st December, 2010, 2011 and 2012 (the “Relevant Periods”), the consolidated statements of cash flows for each of the years ended 31st December, 2011 and 2012, and the consolidated statements of financial position of the SW Target Group as at 31st December, 2010, 2011 and 2012, together with the notes thereto (the “Financial Information”) prepared on the basis of preparation set out in note 2.2 of section II below, for the inclusion in the circular of Regal Real Estate Investment Trust (“Regal REIT”) in connection with the proposed acquisition of 100% of the issued share capital of the SW Target Company by DB Trustees (Hong Kong) Limited (the “Trustee”) (in its capacity as trustee of Regal REIT) and the assignment of all amounts due, owing or payable by the SW Target Group to P&R Holdings Limited (“P&R”) to the Trustee.

The SW Target Company was incorporated in the British Virgin Islands with limited liability on 30th April, 1992. The SW Property Company, a company incorporated in Hong Kong with limited liability on 21st July, 1992, is a wholly-owned subsidiary of the SW Target Company. The principal activity of the SW Target Company is investment holding and the principal activity of the SW Target Group is property development. The SW Target Company and the SW Property Company have adopted 31st December as their financial year end date.

— A2-1 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

As at the date of this report, no statutory financial statements have been prepared for the SW Target Company as it is not subject to statutory audit requirements under the relevant rules and regulations in its jurisdiction of incorporation. The statutory financial statements of the SW Property Company for each of the years ended 31st December, 2010, 2011 and 2012 prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”), which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) were audited by us.

For the purpose of this report, the directors of the SW Target Company (the “Directors”) have prepared the consolidated financial statements of the SW Target Group (the “Underlying Financial Statements”) in accordance with HKFRSs. The Underlying Financial Statements for each of the years ended 31st December, 2010, 2011 and 2012 were audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA.

The Financial Information set out in this report has been prepared from the Underlying Financial Statements with no adjustments made thereon.

Directors’ responsibility

The Directors are responsible for the preparation of the Underlying Financial Statements and the Financial Information that give a true and fair view in accordance with HKFRSs, and for such internal control as the Directors determine is necessary to enable the preparation of the Underlying Financial Statements and the Financial Information that are free from material misstatement, whether due to fraud or error.

Reporting accountants’ responsibility

It is our responsibility to form an independent opinion on the Financial Information and to report our opinion thereon to you.

For the purpose of this report, we have carried out procedures on the Financial Information in accordance with Auditing Guideline 3.340 Prospectuses and the Reporting Accountant issued by the HKICPA.

Opinion in respect of the Financial Information

In our opinion, for the purpose of this report, the Financial Information gives a true and fair view of the state of affairs of the SW Target Group as at 31st December, 2010, 2011 and 2012 and of the consolidated results and cash flows of the SW Target Group for each of the Relevant Periods.

— A2-2 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

I. FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Notes 2010 2011 2012 HK$ HK$ HK$

REVENUE 3 — — — Administrative expenses (275,390) (171,887) (126,123) LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE YEAR 4 (275,390) (171,887) (126,123)

— A2-3 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Notes 2010 2011 2012 HK$ HK$ HK$

NON-CURRENT ASSETS Property, plant and equipment 8 — 401,935,355 452,106,377 Deposit for purchase of property 36,000,000 — — Other deposit 75,000 — — Total non-current assets 36,075,000 401,935,355 452,106,377 CURRENT ASSETS Deposit — — 68,000 Bank balances — 21,962 70,885 Total current assets — 21,962 138,885 CURRENT LIABILITIES Creditors and accruals (25,000) (1,803,116) (3,207,671) NET CURRENT LIABILITIES (25,000) (1,781,154) (3,068,786) TOTAL ASSETS LESS CURRENT LIABILITIES 36,050,000 400,154,201 449,037,591 NON-CURRENT LIABILITIES Amount due to the immediate holding company 11(b) — (219,463,269) (221,794,696) Amount due to the former immediate holding company 11(b) (33,259,912) — — Interest bearing bank borrowing 9 — (178,072,731) (224,750,817) Total non-current liabilities (33,259,912) (397,536,000) (446,545,513) Net assets 2,790,088 2,618,201 2,492,078

EQUITY Issued capital 10 8 8 8 Retained profits 2,790,080 2,618,193 2,492,070 Total equity 2,790,088 2,618,201 2,492,078

— A2-4 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Issued Retained Total capital profits equity HK$ HK$ HK$

At 1st January, 2010 8 3,065,470 3,065,478 Loss and total comprehensive loss for the year — (275,390) (275,390) At 31st December, 2010 and 1st January, 2011 8 2,790,080 2,790,088 Loss and total comprehensive loss for the year — (171,887) (171,887) At 31st December, 2011 and 1st January, 2012 8 2,618,193 2,618,201 Loss and total comprehensive loss for the year — (126,123) (126,123) At 31st December, 2012 8 2,492,070 2,492,078

— A2-5 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

2011 2012 HK$ HK$

CASH FLOWS FROM OPERATING ACTIVITIES Loss for the year (171,887) (126,123) Increase in deposit — (68,000) Increase in creditors and accruals 45,000 30,000 Net cash flows used in operating activities (126,887) (164,123) CASH FLOWS USED IN INVESTING ACTIVITY Additions to property, plant and equipment (363,680,469) (43,928,505) CASH FLOWS FROM FINANCING ACTIVITIES Net repayment to the former immediate holding company (33,259,912) — Advance from the immediate holding company 219,463,269 2,331,427 Drawdown of a bank loan 180,000,000 46,000,000 Payment of loan costs (2,113,644) (420,014) Interest paid (260,395) (3,769,862) Net cash flows from financing activities 363,829,318 44,141,551 NET INCREASE IN CASH AND CASH EQUIVALENTS 21,962 48,923 Cash and cash equivalents at beginning of year — 21,962 CASH AND CASH EQUIVALENTS AT END OF YEAR 21,962 70,885

ANALYSIS OF BALANCE OF CASH AND CASH EQUIVALENTS Bank balances 21,962 70,885

— A2-6 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

II. NOTES TO FINANCIAL INFORMATION

1. CORPORATE INFORMATION

The SW Target Company is a limited company incorporated in the British Virgin Islands. The principal place of business of the SW Target Company is located at 11th Floor, 68 Yee Wo Street, Causeway Bay, Hong Kong.

Prior to 6th May, 2011, in the opinion of the Directors, the holding company and the ultimate holding company of the SW Target Company was Paliburg Development BVI Holdings Limited, which was incorporated in the British Virgin Islands, and Century City International Holdings Limited (“CCIHL”), which was incorporated in Bermuda and is listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), respectively.

On 6th May, 2011, the SW Target Company was disposed of to P&R. Thereafter, in the opinion of the Directors, the holding company of the SW Target Company is P&R, which was incorporated in the British Virgin Islands. P&R is a jointly controlled entity indirectly held as to 50% by each of Paliburg Holdings Limited (“PHL”) and Regal Hotels International Holdings Limited (“RHIHL”), both of which were incorporated in Bermuda and are listed on the Stock Exchange.

On 20th April, 2012, RHIHL, a then listed associate of PHL, announced a share repurchase programme for the repurchase of up to 38,886,400 ordinary shares of RHIHL at a maximum repurchase price of HK$3.80 per share, which was to be operative until 21st July, 2012. Up to 7th May, 2012, an aggregate of 12,600,000 ordinary shares of RHIHL has been repurchased under the programme and, as a result, the aggregate proportionate shareholdings in RHIHL held by PHL increased from 49.3714% to 50.0005%. Accordingly, RHIHL and its subsidiaries became subsidiaries of PHL on that date. As P&R is a jointly controlled entity indirectly held as to 50% by each of PHL and RHIHL, P&R and its subsidiaries also became subsidiaries of PHL upon RHIHL becoming a subsidiary of PHL on 7th May, 2012. Thereafter, in the opinion of the Directors, the ultimate holding company of the SW Target Company changed to CCIHL.

2.1 BASIS OF PRESENTATION

The Financial Information incorporates the financial statements of the SW Target Group for the Relevant Periods. The financial statements of the subsidiary are prepared for the same reporting period as the SW Target Company, using consistent accounting policies. The results of the subsidiary are consolidated from the date of acquisition, being the date on which the SW Target Company obtains control, and continue to be consolidated until the date that such control ceases. All intra-group balances, transactions, unrealised gains and losses arising from intra-group transactions and dividends are eliminated on consolidation in full.

A change in ownership interest of the subsidiary, without a loss of control, is accounted for as an equity transaction.

— A2-7 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

If the SW Target Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary; (ii) the carrying amount of any non-controlling interest; and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received; (ii) the fair value of any investment retained; and (iii) any resulting surplus or deficit in profit or loss. The SW Target Group’s share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate.

Notwithstanding that the SW Target Group had net current liabilities as at the end of each of the Relevant Periods, in the opinion of the Directors, it is appropriate that the Financial Information has been prepared under the going concern basis as P&R has agreed to provide adequate financial support to the SW Target Group to meet its liabilities as and when they fall due.

2.2 BASIS OF PREPARATION

The Financial Information has been prepared in accordance with HKFRSs and accounting principles generally accepted in Hong Kong. All HKFRSs effective for the accounting period commencing from 1st January, 2012, together with the relevant transitional provisions, have been early adopted by the SW Target Group in the preparation of the Financial Information throughout the Relevant Periods.

A statement of cash flows has not been presented for the year ended 31st December, 2010 as the SW Target Group does not operate a bank or cash account or hold any cash equivalents and has had no cash transactions during the year ended 31st December, 2010. Accordingly, in the opinion of the Directors, the presentation of a statement of cash flows for the year ended 31st December, 2010 would provide no additional useful information to the users of the Financial Information.

The Financial Information has been prepared under the historical cost convention and is presented in Hong Kong dollars (“HK$”).

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The SW Target Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in the Financial Information.

HKFRS 1 Amendments Amendments to HKFRS 1 First-time Adoption of Hong Kong Financial Reporting Standards — Government Loans2 HKFRS 7 Amendments Amendments to HKFRS 7 Financial Instruments: Disclosures — Offsetting Financial Assets and Financial Liabilities2 HKFRS 9 Financial Instruments4

— A2-8 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

HKFRS 10 Consolidated Financial Statements2 HKFRS 11 Joint Arrangements2 HKFRS 12 Disclosure of Interests in Other Entities2 HKFRS 10, HKFRS 11 Amendments to HKFRS 10, HKFRS 11 and HKFRS 12 — and HKFRS 12 Transition Guidance2 Amendments HKFRS 10, HKFRS 12 Amendments to HKFRS 10, HKFRS 12 and HKAS 27 (2011) — and HKAS 27 (2011) Investment Entities3 Amendments HKFRS 13 Fair Value Measurement2 HKAS 1 Amendments Amendments to HKAS 1 Presentation of Financial Statements — Presentation of Items of Other Comprehensive Income1 HKAS 19 (2011) Employee Benefits2 HKAS 27 (2011) Separate Financial Statements2 HKAS 28 (2011) Investments in Associates and Joint Ventures2 HKAS 32 Amendments Amendments to HKAS 32 Financial Instruments: Presentation — Offsetting Financial Assets and Financial Liabilities3 HK(IFRIC)-Int 20 Stripping Costs in the Production Phase of a Surface Mine2 Annual Improvements Amendments to a number of HKFRSs issued in June 20122 2009-2011 Cycle

1 Effective for annual periods beginning on or after 1st July, 2012 2 Effective for annual periods beginning on or after 1st January, 2013 3 Effective for annual periods beginning on or after 1st January, 2014 4 Effective for annual periods beginning on or after 1st January, 2015

The SW Target Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application. So far, the SW Target Group considers these new and revised HKFRSs are unlikely to have a significant impact on the SW Target Group’s results of operations and financial position.

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Subsidiary

A subsidiary is an entity whose financial and operating policies the SW Target Company controls, directly or indirectly, so as to obtain benefits from its activities.

(b) Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than financial assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair

— A2-9 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to profit or loss in the period in which it arises.

An assessment is made at the end of each reporting period as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to profit or loss in the period in which it arises.

Property, plant and equipment represents a property under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the acquisition cost of land, direct costs of construction and capitalised borrowing costs on related borrowed funds during the period of construction. Property under construction is reclassified to the appropriate category of property, plant and equipment when completed and ready for use.

(d) Financial assets

Initial recognition and measurement

Financial assets within the scope of HKAS 39 are classified as loans and receivables. The SW Target Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value plus directly attributable transaction costs.

Subsequent measurement of loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such assets are subsequently measured at amortised cost using the effective interest rate method less any allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and includes fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation and the loss arising from impairment are recognised in profit or loss.

— A2-10 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

(e) Impairment of financial assets

The SW Target Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For financial assets carried at amortised cost, the SW Target Group first assesses individually whether objective evidence of impairment exists for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the SW Target Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the SW Target Group.

If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to profit or loss.

— A2-11 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

(f) Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

• the rights to receive cash flows from the asset have expired; or

• the SW Target Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (i) the SW Target Group has transferred substantially all the risks and rewards of the asset; or (ii) the SW Target Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the SW Target Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the SW Target Group’s continuing involvement in the asset. In that case, the SW Target Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the SW Target Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the SW Target Group could be required to repay.

(g) Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of HKAS 39 are classified as loans and borrowings. The SW Target Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and net of directly attributable transaction costs.

Subsequent measurement of loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.

— A2-12 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the statement of comprehensive income.

(h) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in profit or loss.

(i) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

(j) Borrowing costs

Borrowing costs directly attributable to the acquisition and construction of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Interest is capitalised at the interest rates related to specific development project borrowings. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(k) Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the jurisdictions in which the SW Target Group operates.

— A2-13 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, while deferred tax assets are recognised for all deductible temporary differences, the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, the carryforward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(l) Related parties

A party is considered to be related to the SW Target Group if:

(i) the party is a person or a close member of that person’s family and that person

(1) has control or joint control over the SW Target Group;

(2) has significant influence over the SW Target Group; or

(3) is a member of the key management personnel of the SW Target Group or of a parent of the SW Target Group; or

(ii) the party is an entity where any of the following conditions applies:

(1) the entity and the SW Target Group are members of the same group;

(2) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

— A2-14 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

(3) the entity and the SW Target Group are joint ventures of the same third party;

(4) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(5) the entity is a post-employment benefit plan for the benefit of employees of either the SW Target Group or an entity related to the SW Target Group;

(6) the entity is controlled or jointly controlled by a person identified in (i); and

(7) a person identified in (i)(1) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(m) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the SW Target Group’s cash management.

3. REVENUE AND OPERATING SEGMENT INFORMATION

(a) Revenue

The SW Target Group did not earn any revenue during the Relevant Periods.

(b) Operating segment information

For management purpose, the Directors considered that the SW Target Group has only one operating segment which is the property development. Since there is only one operating segment for the SW Target Group, no further operating segment analysis thereof is presented.

All of its assets and liabilities as at the end of the Relevant Periods were located in Hong Kong.

As the SW Target Group did not generate any revenue during the Relevant Periods, no geographical information related to revenue from external customers, or information about a major customer is presented.

— A2-15 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

4. LOSS FOR THE YEAR

The SW Target Group’s loss for the year is arrived at after charging auditors’ remuneration of HK$70,000 and HK$120,000 for the years ended 31st December, 2011 and 2012, respectively.

During the year ended 31st December, 2010, auditors’ remuneration was borne by a fellow subsidiary.

None of the Directors received any fees or emoluments in respect of their services rendered to the SW Target Group during the Relevant Periods.

5. FINANCE COSTS

2010 2011 2012 HK$ HK$ HK$

Interest on bank loan wholly repayable within five years — 360,740 3,704,222 Interest on bank overdraft — 11 — Other loan costs — 191,635 1,096,578 — 552,386 4,800,800 Less: Capitalised in respect of property under construction — (552,386) (4,800,800) ———

6. INCOME TAX

No provision for Hong Kong profits tax is required as the SW Target Group did not generate any assessable profits arising in Hong Kong during the Relevant Periods.

A reconciliation of the tax credit applicable to loss for the year at the Hong Kong statutory tax rate to the tax expense at the effective tax rate is as follows:

2010 2011 2012 HK$ HK$ HK$

Loss for the year (275,390) (171,887) (126,123)

Tax at the statutory tax rate of 16.5% (45,439) (28,361) (20,810) Expenses not deductible for tax 45,439 28,361 20,810 Tax charge at the SW Target Group’s effective rate — — —

— A2-16 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

7. LOSS PER SHARE

Loss per share information is not presented as its inclusion, for the purpose of this report, is not considered meaningful.

8. PROPERTY, PLANT AND EQUIPMENT

Property under construction HK$

31st December, 2011 Additions during the year and balance as at 31st December, 2011 401,935,355

31st December, 2012 At 31st December, 2011 and 1st January, 2012: Cost 401,935,355 Additions during the year 50,171,022 Net carrying amount 452,106,377

The property under construction is held under a long term lease and is situated in Hong Kong.

At 31st December, 2011 and 2012, the SW Target Group’s property under construction with a carrying value of HK$401,935,355 and HK$452,106,377 was pledged to secure banking facilities granted to the SW Target Group.

9. INTEREST BEARING BANK BORROWING

2010 2011 2012 Maturity HK$ Maturity HK$ Maturity HK$

Non-current Bank loan — — 2014 178,072,731 2014 224,750,817

The SW Target Group’s bank borrowing is (i) secured by a pledge of the property under construction (note 8); and (ii) guaranteed by PHL and RHIHL, on a several basis, up to HK$170,000,000 each.

The interest bearing bank borrowing is denominated in Hong Kong dollars and bears interest at Hong Kong Interbank Offer Rate plus 1.55% per annum.

— A2-17 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

10. SHARE CAPITAL

2010 2011 2012 HK$ HK$ HK$

Authorised: 50,000 ordinary shares of US$1 each 390,000 390,000 390,000

Issued and fully paid: 1 ordinary share of US$1 8 8 8

11. RELATED PARTY TRANSACTIONS

(a) In addition to the transactions and balances detailed elsewhere in the Financial Information, the SW Target Group had the following material transactions with related parties during the Relevant Periods:

Notes 2010 2011 2012 HK$ HK$ HK$

A related company*: Development consultancy fee paid (i) — — 4,410,000

A fellow subsidiary: Construction cost paid (ii) — — 22,282,000

* The above related company is a wholly-owned subsidiary of PHL.

Notes:

(i) On 7th March, 2011, the SW Target Group entered into a contract with Paliburg Development Consultants Limited, a wholly-owned subsidiary of PHL, for the provision of development consultancy services to the property development project of the SW Target Group in an amount of HK$6,300,000. The fee was charged by reference to the stage of completion of the development project.

(ii) On 24th February, 2012, the SW Target Group entered into a contract with Chatwin Engineering Limited, a wholly-owned subsidiary of PHL, for the provision of main construction work to the property development project of the SW Target Group in an amount of HK$77,421,345. The fee was charged by reference to the value of work done as stipulated in the contract.

(b) The amounts due to the immediate holding company and the former immediate holding company disclosed on the face of the consolidated statements of financial position are unsecured, interest-free and not repayable within one year.

— A2-18 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

12. COMMITMENTS

At 31st December, 2010, 2011 and 2012, the SW Target Group had the following outstanding capital commitments in respect of the property development project:

2010 2011 2012 HK$ HK$ HK$

Authorised, but not contracted for — 201,577,393 25,995,647 Contracted, but not provided for — 24,839,779 155,054,454 — 226,417,172 181,050,101

13. FINANCIAL INSTRUMENTS BY CATEGORY

The financial assets of the SW Target Group comprise deposits and bank balances, which are categorised as loans and receivables. The carrying amounts of these financial assets are the amounts shown on the consolidated statements of financial position.

The financial liabilities of the SW Target Group comprise creditors and accruals, amounts due to the immediate holding company and the former immediate holding company, and interest bearing bank borrowing, which are categorised as financial liabilities at amortised cost. The carrying amounts of these financial liabilities are the amounts shown on the consolidated statements of financial position.

14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The SW Target Group’s principal financial instruments comprise amounts due to the immediate holding company and the former immediate holding company, and interest bearing bank borrowing. The main purpose of these financial instruments is to raise finance for the SW Target Group’s operations. The SW Target Group has other financial assets and liabilities such as deposits, bank balances, and creditors and accruals, which arise directly from its operations. The carrying amounts of the SW Target Group’s financial instruments approximate to their fair values due to the short maturity or no fixed terms of repayment of these instruments.

The main risks arising from the SW Target Group’s financial instruments are interest rate risk, credit risk and liquidity risk. The Directors review and agree policies for managing these risks and they are summarised below.

— A2-19 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

Interest rate risk

The SW Target Group’s exposure to interest rate risks relates primarily to the SW Target Group’s bank borrowing with a floating interest rate. The interest rate and term of repayment of the SW Target Group’s borrowing are disclosed in note 9 to the Financial Information. The SW Target Group’s objective is to obtain the most favourable interest rates available for its borrowing. The SW Target Group currently has not used any interest rate swap arrangements but will consider hedging interest rate risk should the need arise.

As at 31st December, 2011 and 2012, it is estimated that an increase/decrease of 1% in interest rate would increase/decrease the SW Target Group’s finance costs capitalised by HK$1,800,000 and HK$2,260,000, respectively, assuming that the SW Target Group’s bank borrowing outstanding at the year end dates was outstanding for the whole years ended 31st December, 2011 and 2012.

Credit risk

The credit risk of the SW Target Group’s financial assets, which comprise deposits and bank balances, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

Liquidity risk

In the management of liquidity risk, the SW Target Group monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance the SW Target Group’s operations. The SW Target Group also maintains a balance between continuity of funding and flexibility through the funding from the immediate holding company and the former immediate holding company in order to meet its liquidity requirements both in the short and long terms.

The maturity profile as at 31st December, 2010, 2011 and 2012, based on the contractual undiscounted payments, was as follows:

2010

Not repayable Within 1 year within 1 year Total HK$ HK$ HK$

Creditors and accruals 25,000 — 25,000 Amount due to the former immediate holding company — 33,259,912 33,259,912 25,000 33,259,912 33,284,912

— A2-20 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

2011

Not repayable Within 1 year within 1 year Total HK$ HK$ HK$

Creditors and accruals 1,803,116 — 1,803,116 Amount due to the immediate holding company — 219,463,269 219,463,269 Interest bearing bank borrowing 3,330,000 186,112,603 189,442,603 5,133,116 405,575,872 410,708,988

2012

Not repayable Within 1 year within 1 year Total HK$ HK$ HK$

Creditors and accruals 3,207,671 — 3,207,671 Amount due to the immediate holding company — 221,794,696 221,794,696 Interest bearing bank borrowing 4,090,600 229,418,173 233,508,773 7,298,271 451,212,869 458,511,140

Capital management

The primary objectives of the SW Target Group’s capital management are to safeguard the SW Target Group’s ability to continue as a going concern and to enhance shareholder’s value.

The SW Target Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and risk characteristics of the underlying assets. Capital represents total equity. To maintain or adjust the capital structure, the SW Target Group may adjust the dividend payment to the shareholder, return capital to the shareholder or issue new shares. The SW Target Group is not subject to any externally imposed capital requirements.

— A2-21 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the SW Target Group or its subsidiary, the SW Property Company, in respect of any period subsequent to 31st December, 2012.

Yours faithfully Ernst & Young Certified Public Accountants Hong Kong

— A2-22 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

B. Accountants’ Report in respect of the NP Target Company

The following is the text of a report, prepared for the purpose of inclusion in this Circular, from Ernst & Young, Certified Public Accountants.

22/F CITIC Tower 1 Tim Mei Avenue Central, Hong Kong

29 June 2013

The Directors Regal Portfolio Management Limited (in its capacity as manager of Regal Real Estate Investment Trust) Unit No. 1504, 15th Floor 68 Yee Wo Street Causeway Bay Hong Kong

Dear Sirs

We set out below our report on the financial information of Fortune Mine Limited (the “NP Target Company”) and its subsidiary, Wise Decade Investments Limited (the “NP Property Company”) (hereinafter collectively referred to as the “NP Target Group”) comprising the consolidated statements of comprehensive income and consolidated statements of changes in equity for the period from 23rd May, 2011 (date of incorporation) to 31st December, 2011 and the year ended 31st December, 2012 (the “Relevant Periods”), the consolidated statement of cash flows for the year ended 31st December, 2012, and the consolidated statements of financial position of the NP Target Group as at 31st December, 2011 and 2012, together with the notes thereto (the “Financial Information”) prepared on the basis of preparation set out in note 2.2 of section II below, for the inclusion in the circular of Regal Real Estate Investment Trust (“Regal REIT”) in connection with the proposed acquisition of 100% of the issued share capital of the NP Target Company by DB Trustees (Hong Kong) Limited (the “Trustee”) (in its capacity as trustee of Regal REIT) and the assignment of all amounts due, owing or payable by the NP Target Group to P&R Holdings Limited (“P&R”) to the Trustee, upon exercise of the call option granted by P&R.

The NP Target Company was incorporated in the British Virgin Islands with limited liability on 23rd May, 2011. The NP Property Company, a company incorporated in Hong Kong with limited liability on 22nd February, 2011, is a wholly-owned subsidiary of the NP Target Company. The principal activity of the NP Target Company is investment holding and the principal activity of the NP Target Group is property development. The NP Target Company and the NP Property Company have adopted 31st December as their financial year end date.

— A2-23 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

As at the date of this report, no statutory financial statements have been prepared for the NP Target Company as it is not subject to statutory audit requirements under the relevant rules and regulations in its jurisdiction of incorporation. The statutory financial statements of the NP Property Company for the period from 23rd May, 2011 (date of incorporation) to 31st December, 2011 and the year ended 31st December, 2012 prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”), which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) were audited by us.

For the purpose of this report, the directors of the NP Target Company (the “Directors”) have prepared the consolidated financial statements of the NP Target Group (the “Underlying Financial Statements”) in accordance with HKFRSs. The Underlying Financial Statements for the period from 23rd May, 2011 (date of incorporation) to 31st December, 2011 and the year ended 31st December, 2012 were audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA.

The Financial Information set out in this report has been prepared from the Underlying Financial Statements with no adjustments made thereon.

Directors’ responsibility

Reporting accountants’ responsibility

It is our responsibility to form an independent opinion on the Financial Information and to report our opinion thereon to you.

For the purpose of this report, we have carried out procedures on the Financial Information in accordance with Auditing Guideline 3.340 Prospectuses and the Reporting Accountant issued by the HKICPA.

Opinion in respect of the Financial Information

In our opinion, for the purpose of this report, the Financial Information gives a true and fair view of the state of affairs of the NP Target Group as at 31st December, 2011 and 2012 and of the consolidated results and cash flows of the NP Target Group for each of the Relevant Periods.

— A2-24 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

I. FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Period from 23rd May, 2011 (date of incorporation) to Year ended 31st December, 31st December, Notes 2011 2012 HK$ HK$

REVENUE 3 — — Administrative expenses (40,955) (77,223) LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE PERIOD/YEAR 4 (40,955) (77,223)

— A2-25 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Notes 2011 2012 HK$ HK$

NON-CURRENT ASSET Property, plant and equipment 8 480,479,791 519,617,923 CURRENT ASSETS Deposit — 68,000 Other receivable 12,619 — Bank balance — 75,332 Total current assets 12,619 143,332 CURRENT LIABILITIES Creditors and accruals (103,500) (1,788,662) NET CURRENT LIABILITIES (90,881) (1,645,330) TOTAL ASSETS LESS CURRENT LIABILITIES 480,388,910 517,972,593 NON-CURRENT LIABILITIES Amount due to the immediate holding company 11(b) (480,429,857) (260,897,180) Interest bearing bank borrowing 9 — (257,193,583) Total non-current liabilities (480,429,857) (518,090,763) Net liabilities (40,947) (118,170)

EQUITY Issued capital 10 8 8 Accumulated losses (40,955) (118,178) Total equity (40,947) (118,170)

— A2-26 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Issued Accumulated Total capital losses equity Note HK$ HK$ HK$

Issue of ordinary share 10 8 — 8 Loss and total comprehensive loss for the period — (40,955) (40,955) At 31st December, 2011 and 1st January, 2012 8 (40,955) (40,947) Loss and total comprehensive loss for the year — (77,223) (77,223) At 31st December, 2012 8 (118,178) (118,170)

— A2-27 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31st December, 2012 HK$

CASH FLOWS FROM OPERATING ACTIVITIES Loss for the year (77,223) Increase in deposit (68,000) Decrease in other receivable 12,619 Increase in creditors and accruals 20,000 Net cash flows used in operating activities (112,604) CASH FLOWS USED IN INVESTING ACTIVITY Additions to property, plant equipment (34,360,100) CASH FLOWS FROM FINANCING ACTIVITIES Net repayment to the immediate holding company (219,532,677) Drawdown of a bank loan 260,640,000 Payment of loan costs (4,344,861) Interest paid (2,214,426) Net cash flows from financing activities 34,548,036 NET INCREASE IN CASH AND CASH EQUIVALENTS 75,332 Cash and cash equivalents at beginning of year — CASH AND CASH EQUIVALENTS AT END OF YEAR 75,332

ANALYSIS OF BALANCE OF CASH AND CASH EQUIVALENTS Bank balance 75,332

— A2-28 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

II. NOTES TO FINANCIAL INFORMATION

1. CORPORATE INFORMATION

The NP Target Company is a limited company incorporated in the British Virgin Islands. The principal place of business of the NP Target Company is located at 11th Floor, 68 Yee Wo Street, Causeway Bay, Hong Kong.

Since incorporation, in the opinion of the Directors, the holding company of the NP Target Company is P&R, which was incorporated in the British Virgin Islands. P&R is a jointly controlled entity indirectly held as to 50% by each of Paliburg Holdings Limited (“PHL”) and Regal Hotels International Holdings Limited (“RHIHL”), both of which were incorporated in Bermuda and are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

2.1 BASIS OF PRESENTATION

The Financial Information incorporates the financial statements of the NP Target Group for the Relevant Periods. The financial statements of the subsidiary are prepared for the same reporting period as the NP Target Company, using consistent accounting policies. The results of the subsidiary are consolidated from the date of acquisition, being the date on which the NP Target Company obtains control, and continue to be consolidated until the date that such control ceases. All intra-group balances, transactions, unrealised gains and losses arising from intra-group transactions and dividends are eliminated on consolidation in full.

A change in ownership interest of the subsidiary, without a loss of control, is accounted for as an equity transaction.

— A2-29 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

If the NP Target Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary; (ii) the carrying amount of any non-controlling interest; and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received; (ii) the fair value of any investment retained; and (iii) any resulting surplus or deficit in profit or loss. The NP Target Group’s share of components previously recognised in other comprehensive income is reclassified to profit or loss or accumulated losses, as appropriate.

Notwithstanding that the NP Target Group had net current liabilities and net liabilities as at the end of each of the Relevant Periods, in the opinion of the Directors, it is appropriate that the Financial Information has been prepared under the going concern basis as P&R has agreed to provide adequate financial support to the NP Target Group to meet its liabilities as and when they fall due.

2.2 BASIS OF PREPARATION

The Financial Information has been prepared in accordance with HKFRSs and accounting principles generally accepted in Hong Kong. All HKFRSs effective for the accounting period commencing from 1st January, 2012, together with the relevant transitional provisions, have been early adopted by the NP Target Group in the preparation of the Financial Information throughout the Relevant Periods.

A statement of cash flows has not been presented for the period from 23rd May, 2011 (date of incorporation) to 31st December, 2011 as the NP Target Group does not operate a bank or cash account or hold any cash equivalents and has had no cash transactions during the period ended 31st December, 2011. Accordingly, in the opinion of the Directors, the presentation of a statement of cash flows for the period ended 31st December, 2011 would provide no additional useful information to the users of the Financial Information.

The Financial Information has been prepared under the historical cost convention and is presented in Hong Kong dollars (“HK$”).

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The NP Target Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in the Financial Information.

— A2-30 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

HKFRS 9 Financial Instruments4 HKFRS 10 Consolidated Financial Statements2 HKFRS 11 Joint Arrangements2 HKFRS 12 Disclosure of Interests in Other Entities2 HKFRS 10, HKFRS 11 Amendments to HKFRS 10, HKFRS 11 and HKFRS 12 — and HKFRS 12 Transition Guidance2 Amendments HKFRS 10, HKFRS 12 Amendments to HKFRS 10, HKFRS 12 and HKAS 27 (2011) — and HKAS 27 (2011) Investment Entities3 Amendments HKFRS 13 Fair Value Measurement2 HKAS 1 Amendments Amendments to HKAS 1 Presentation of Financial Statements — Presentation of Items of Other Comprehensive Income1 HKAS 19 (2011) Employee Benefits2 HKAS 27 (2011) Separate Financial Statements2 HKAS 28 (2011) Investments in Associates and Joint Ventures2 HKAS 32 Amendments Amendments to HKAS 32 Financial Instruments: Presentation — Offsetting Financial Assets and Financial Liabilities3 HK(IFRIC)-Int 20 Stripping Costs in the Production Phase of a Surface Mine2 Annual Improvements Amendments to a number of HKFRSs issued in June 20122 2009-2011 Cycle

The NP Target Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application. So far, the NP Target Group considers these new and revised HKFRSs are unlikely to have a significant impact on the NP Target Group’s results of operations and financial position.

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Subsidiary

A subsidiary is an entity whose financial and operating policies the NP Target Company controls, directly or indirectly, so as to obtain benefits from its activities.

(b) Impairment of non-financial assets

— A2-31 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

(d) Financial assets

Initial recognition and measurement

Financial assets within the scope of HKAS 39 are classified as loans and receivables. The NP Target Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value plus directly attributable transaction costs.

Subsequent measurement of loans and receivables

— A2-32 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

(e) Impairment of financial assets

The NP Target Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For financial assets carried at amortised cost, the NP Target Group first assesses individually whether objective evidence of impairment exists for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the NP Target Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

— A2-33 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

(f) Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

• the rights to receive cash flows from the asset have expired; or

• the NP Target Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (i) the NP Target Group has transferred substantially all the risks and rewards of the asset; or (ii) the NP Target Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the NP Target Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the NP Target Group’s continuing involvement in the asset. In that case, the NP Target Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the NP Target Group has retained.

(g) Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of HKAS 39 are classified as loans and borrowings. The NP Target Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and net of directly attributable transaction costs.

Subsequent measurement of loans and borrowings

— A2-34 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

(h) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

(i) Offsetting of financial instruments

(j) Borrowing costs

(k) Income tax

— A2-35 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

(l) Related parties

A party is considered to be related to the NP Target Group if:

(i) the party is a person or a close member of that person’s family and that person

(1) has control or joint control over the NP Target Group;

(2) has significant influence over the NP Target Group; or

(3) is a member of the key management personnel of the NP Target Group or of a parent of the NP Target Group; or

(ii) the party is an entity where any of the following conditions applies:

(1) the entity and the NP Target Group are members of the same group;

(2) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

— A2-36 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

(3) the entity and the NP Target Group are joint ventures of the same third party;

(4) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(5) the entity is a post-employment benefit plan for the benefit of employees of either the NP Target Group or an entity related to the NP Target Group;

(6) the entity is controlled or jointly controlled by a person identified in (i); and

(7) a person identified in (i)(1) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(m) Cash and cash equivalents

3. REVENUE AND OPERATING SEGMENT INFORMATION

(a) Revenue

The NP Target Group did not earn any revenue during the Relevant Periods.

(b) Operating segment information

For management purpose, the Directors considered that the NP Target Group has only one operating segment which is the property development. Since there is only one operating segment for the NP Target Group, no further operating segment analysis thereof is presented.

All of its assets and liabilities as at the end of the Relevant Periods were located in Hong Kong.

As the NP Target Group did not generate any revenue during the Relevant Periods, no geographical information related to revenue from external customers, or information about a major customer is presented.

4. LOSS FOR THE PERIOD/YEAR

The NP Target Group’s loss for the period/year is arrived at after charging auditors’ remuneration of HK$30,000 and HK$70,000 for the period from 23rd May, 2011 (date of incorporation) to 31st December, 2011, and the year ended 31st December, 2012, respectively.

— A2-37 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

None of the Directors received any fees or emoluments in respect of their services rendered to the NP Target Group during the Relevant Periods.

5. FINANCE COSTS

Period from 23rd May, 2011 (date of incorporation) to Year ended 31st December, 31st December, 2011 2012 HK$ HK$

Interest on bank loan wholly repayable within five years — 2,267,285 Other loan costs — 1,020,047 — 3,287,332 Less: Capitalised in respect of property under construction — (3,287,332) ——

6. INCOME TAX

No provision for Hong Kong profits tax is required as the NP Target Group did not generate any assessable profits arising in Hong Kong during the Relevant Periods.

A reconciliation of the tax credit applicable to loss for the period/year at the Hong Kong statutory tax rate to the tax expense at the effective tax rate is as follows:

Period from 23rd May, 2011 (date of incorporation) to Year ended 31st December, 31st December, 2011 2012 HK$ HK$

Loss for the period/year (40,955) (77,223)

Tax at the statutory tax rate of 16.5% (6,758) (12,742) Expenses not deductible for tax 6,758 12,742 Tax charge at the NP Target Group’s effective rate — —

— A2-38 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

7. LOSS PER SHARE

Loss per share information is not presented as its inclusion, for the purpose of this report, is not considered meaningful.

8. PROPERTY, PLANT AND EQUIPMENT

Property under construction HK$

31st December, 2011 Additions during the period and balance as at 31st December, 2011 480,479,791

31st December, 2012 At 31st December, 2011 and 1st January, 2012: Cost 480,479,791 Additions during the year 39,138,132 Net carrying amount 519,617,923

The property under construction is held under a long term lease and is situated in Hong Kong.

At 31st December, 2012, the NP Target Group’s property under construction with a carrying value of HK$519,617,923 was pledged to secure banking facilities granted to the NP Target Group.

9. INTEREST BEARING BANK BORROWING

2011 2012 Maturity HK$ Maturity HK$

Non-current Bank loan — — 2015 257,193,583

As at 31st December, 2012, the NP Target Group’s bank borrowing is (i) secured by a pledge of the property under construction (note 8); and (ii) guaranteed by PHL and RHIHL, on a several basis, up to HK$264,820,000 each.

The interest bearing bank borrowing is denominated in Hong Kong dollars and bears interest at Hong Kong Interbank Offer Rate plus 2.5% per annum.

— A2-39 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

10. SHARE CAPITAL

2011 2012 HK$ HK$

Authorised: 50,000 ordinary shares of US$1 each 390,000 390,000

Issued and fully paid: 1 ordinary share of US$1 8 8

The NP Target Company was incorporated with authorised share capital of US$50,000 divided into 50,000 ordinary shares of US$1 each. On incorporation, 1 ordinary share of US$1 was issued at par for cash to provide initial working capital.

11. RELATED PARTY TRANSACTIONS

(a) In addition to the transactions and balances detailed elsewhere in the Financial Information, the NP Target Group had the following material transactions with related parties during the Relevant Periods:

Period from 23rd May, 2011 (date of incorporation) to Year ended 31st December, 31st December, Notes 2011 2012 HK$ HK$

A related company*: Development consultancy fee paid (i) — 3,750,000

A fellow subsidiary: Construction cost paid (ii) — 3,552,000

* The above related company is a wholly-owned subsidiary of PHL.

Notes:

(i) On 8th August, 2011, the NP Target Group entered into a contract with Paliburg Development Consultants Limited, a wholly-owned subsidiary of PHL, for the provision of development consultancy services to the property development project of the NP Target Group in an amount of HK$7,500,000. The fee was charged by reference to the stage of completion of the development project.

— A2-40 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

(ii) On 4th October, 2012, the NP Target Group entered into a contract with Chatwin Engineering Limited, a wholly-owned subsidiary of PHL, for the provision of main construction work to the property development project of the NP Target Group in an amount of HK$73,000,000. The fee was charged by reference to the value of work done as stipulated in the contract.

(b) The amount due to the immediate holding company disclosed on the face of the consolidated statements of financial position is unsecured, interest-free and not repayable within one year.

12. COMMITMENTS

At 31st December, 2011 and 2012, the NP Target Group had the following outstanding capital commitments in respect of the property development project:

2011 2012 HK$ HK$

Authorised, but not contracted for 263,541,482 115,990,269 Contracted, but not provided for 35,268,674 147,511,885 298,810,156 263,502,154

13. FINANCIAL INSTRUMENTS BY CATEGORY

The financial assets of the NP Target Group comprise deposit, other receivable and bank balance, which are categorised as loans and receivables. The carrying amounts of these financial assets are the amounts shown on the consolidated statements of financial position.

The financial liabilities of the NP Target Group comprise creditors and accruals, amount due to the immediate holding company and interest bearing bank borrowing, which are categorised as financial liabilities at amortised cost. The carrying amounts of these financial liabilities are the amounts shown on the consolidated statements of financial position.

14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The NP Target Group’s principal financial instruments comprise amount due to the immediate holding company and interest bearing bank borrowing. The main purpose of these financial instruments is to raise finance for the NP Target Group’s operations. The NP Target Group has other financial assets and liabilities such as deposit, other receivable, bank balance and creditors and accruals, which arise directly from its operations. The carrying amounts of the NP Target Group’s financial instruments approximate to their fair values due to the short maturity or no fixed terms of repayment of these instruments.

The main risks arising from the NP Target Group’s financial instruments are interest rate risk, credit risk and liquidity risk. The Directors review and agree policies for managing these risks and they are summarised below.

— A2-41 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

Interest rate risk

The NP Target Group’s exposure to interest rate risks relates primarily to the NP Target Group’s bank borrowing with a floating interest rate. The interest rate and term of repayment of the NP Target Group’s borrowing are disclosed in note 9 to the Financial Information. The NP Target Group’s objective is to obtain the most favourable interest rates available for its borrowing. The NP Target Group currently has not used any interest rate swap arrangements but will consider hedging interest rate risk should the need arise.

As at 31st December, 2012, it is estimated that an increase/decrease of 1% in interest rates would increase/decrease the NP Target Group’s finance costs capitalised by HK$2,606,400 during the year ended 31st December, 2012, assuming that the NP Target Group’s bank borrowing outstanding at 31 December, 2012 was outstanding for whole year ended 31st December, 2012.

Credit risk

The credit risk of the NP Target Group’s financial assets, which comprise deposit, other receivable and bank balance, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

Liquidity risk

In the management of liquidity risk, the NP Target Group monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance the NP Target Group’s operations. The NP Target Group also maintains a balance between continuity of funding and flexibility through the funding from the immediate holding company in order to meet its liquidity requirements both in the short and long terms.

The maturity profile as at 31st December, 2011 and 2012, based on the contractual undiscounted payments, was as follows:

2011

Not repayable Within 1 year within 1 year Total HK$ HK$ HK$

Creditors and accruals 103,500 — 103,500 Amount due to the immediate holding company — 480,429,857 480,429,857 103,500 480,429,857 480,533,357

— A2-42 — APPENDIX 2 ACCOUNTANTS’ REPORTS IN RESPECT OF THE SW TARGET COMPANY AND THE NP TARGET COMPANY

2012

Not repayable Within 1 year within 1 year Total HK$ HK$ HK$

Creditors and accruals 1,788,662 — 1,788,662 Amount due to the immediate holding company — 260,897,180 260,897,180 Interest bearing bank borrowing 7,239,276 269,009,793 276,249,069 9,027,938 529,906,973 538,934,911

Capital management

The primary objectives of the NP Target Group’s capital management are to safeguard the NP Target Group’s ability to continue as a going concern and to enhance shareholder’s value.

The NP Target Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and risk characteristics of the underlying assets. Capital represents total equity. To maintain or adjust the capital structure, the NP Target Group may return capital to the shareholder or issue new shares. The NP Target Group is not subject to any externally imposed capital requirements.

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the NP Target Group or its subsidiary, the NP Property Company, in respect of any period subsequent to 31st December, 2012.

Yours faithfully Ernst & Young Certified Public Accountants Hong Kong

— A2-43 — APPENDIX 3 UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the text of a report, prepared for the purpose of inclusion in this Circular, from Ernst & Young, Certified Public Accountants, in relation to the unaudited pro forma financial information of the Regal REIT Group.

22/F CITIC Tower 1 Tim Mei Avenue Central, Hong Kong

29 June 2013

The Directors Regal Portfolio Management Limited (in its capacity as manager of Regal Real Estate Investment Trust) Unit No. 1504, 15th Floor 68 Yee Wo Street Causeway Bay Hong Kong

Dear Sirs

We report on the unaudited pro forma statement of financial position and the unaudited pro forma income statement (the “Unaudited Pro Forma Financial Information”) of Regal Real Estate Investment Trust (“Regal REIT”) and its subsidiaries (hereinafter collectively referred to as the “Regal REIT Group”), which have been prepared by the directors of Regal Portfolio Management Limited (the “Directors”) for illustrative purposes only, to provide information about how (i) the proposed acquisition of 100% of the issued share capital of Plentiful Investments Limited (the “SW Target Company”) by DB Trustees (Hong Kong) Limited (the “Trustee”) (in its capacity as trustee of Regal REIT) and the assignment to the Trustee of all amounts due, owing or payable by the SW Target Company to P&R Holdings Limited (“P&R”); and (ii) the proposed acquisition of 100% of the issued share capital of Fortune Mine Limited (the “NP Target Company”) by the Trustee and the assignment to the Trustee of all amounts due, owing or payable by the NP Target Company to P&R, upon exercise of the call option granted by P&R, might have affected the financial information presented, for inclusion in Appendix 3 to the circular of Regal REIT dated 29 June 2013 (the “Circular”). The basis of preparation of the Unaudited Pro Forma Financial Information is set out in Appendix 3 to the Circular.

Respective Responsibilities of the Directors and the Reporting Accountants

It is the responsibility solely of the Directors to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

It is our responsibility to form an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

— A3-1 — APPENDIX 3 UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Basis of Opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 Accountants’ Reports on Pro Forma Financial Information in Investment Circulars issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments, and discussing the Unaudited Pro Forma Financial Information with the Directors. This engagement did not involve independent examination of any of the underlying financial information.

Our work did not constitute an audit or a review made in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA, and accordingly, we do not express any such audit or review assurance on the Unaudited Pro Forma Financial Information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the Directors on the basis stated, that such basis is consistent with the accounting policies of the Regal REIT Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the Directors, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

• the financial position of the Regal REIT Group as at 31 December 2012 or any future dates; or

• the results of the Regal REIT Group for the year ended 31 December 2012 or any future periods.

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the Directors on the basis stated;

(b) such basis is consistent with the accounting policies of the Regal REIT Group; and

(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully Ernst & Young Certified Public Accountants Hong Kong

— A3-2 — APPENDIX 3 UNAUDITED PRO FORMA FINANCIAL INFORMATION 2(z)(iii) OF THE ENLARGED GROUP

Introduction

The following is illustrative and unaudited pro forma financial information of the Enlarged Group (the “Unaudited Pro Forma Financial Information”), including the unaudited pro forma consolidated statement of financial position and the unaudited pro forma consolidated income statement, which have been prepared on the basis of the notes set out below for the purpose of illustrating the effect of the SW Transaction and the NP Transaction, as if the SW Transaction and the NP Transaction had taken place on 31st December, 2012 for the unaudited pro forma consolidated statement of financial position and on 1st January, 2012 for the unaudited pro forma consolidated income statement.

The Unaudited Pro Forma Financial Information has been prepared using the accounting policies consistent with those of the Regal REIT Group as set out in note 2.4 to the financial statements included in the published annual report of the Regal REIT Group for the year ended 31st December, 2012.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purpose only and because of its hypothetical nature, it may not give a true picture of the financial position and results of operations of the Enlarged Group had the SW Transaction or the NP Transaction been completed as at 31st December, 2012 or 1st January, 2012, where applicable, or any future date.

The Unaudited Pro Forma Financial Information should be read in conjunction with the historical financial information of the Regal REIT Group as set out in its published annual report for the year ended 31 December 2012 and other financial information included elsewhere in this Circular.

— A3-3 — A. Unaudited Pro Forma Consolidated Statement of Financial Position as at 31st December, 2012 INFORMATION FINANCIAL FORMA PRO UNAUDITED 3 APPENDIX

The SW Transaction and the NP The SW Transaction The NP Transaction Transaction Unaudited pro forma statement Unaudited pro Unaudited pro of financial forma statement forma statement position of the of financial of financial Enlarged Group position of the position of the after completion Enlarged Group Enlarged Group of the SW after completion after completion Transaction The Regal The SW Pro forma of the SW The NP Pro forma of the NP and the NP REIT Group Target Group adjustments Notes Transaction Target Group adjustments Notes Transaction Transaction HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) Note 1 Note 2a Note 2b 34— A3-4 — NON-CURRENT ASSETS Property, plant and equipment 740,000 452,106 (452,106) 3(a) 740,000 519,618 (519,618) 3(b) 740,000 740,000 Investment properties 20,292,000 — 1,580,000 4(a) 21,872,000 — 1,650,000 4(b) 21,942,000 23,522,000 2,605 5 2,605 5 (2,605) 6 (2,605) 6 Total non-current assets 21,032,000 452,106 22,612,000 519,618 22,682,000 24,262,000

CURRENT ASSETS GROUP ENLARGED THE OF Accounts receivable 98,216 — 98,216 — 98,216 98,216 Prepayments, deposits and other receivables 1,939 68 2,007 68 2,007 2,075 Restricted cash 44,237 — 44,237 — 44,237 44,237 Cash and cash equivalents 25,364 71 (2,605) 5 22,691 75 (2,605) 5 22,691 20,018 (139) 7 (143) 7 Total current assets 169,756 139 167,151 143 167,151 164,546

Total assets 21,201,756 452,245 22,779,151 519,761 22,849,151 24,426,546 PEDX3UADTDPOFRAFNNILINFORMATION FINANCIAL FORMA PRO UNAUDITED 3 APPENDIX

CURRENT LIABILITIES Accounts payable 73,354 — 73,354 — 73,354 73,354 35— A3-5 — Deposits received 131 — 131 — 131 131 Due to related companies 210 — 210 — 210 210 Other payables and accruals 14,058 3,207 (3,207) 8 29,908 1,788 (1,788) 8 30,608 46,458 15,800 9 16,500 9 50 9 50 9 Interest-bearing bank borrowings 4,794 — 4,794 — 4,794 4,794 Tax payable 25,362 — 25,362 — 25,362 25,362 FTEELRE GROUP ENLARGED THE OF Total current liabilities 117,909 3,207 133,759 1,788 134,459 150,309

NET CURRENT ASSETS/(LIABILITIES) 51,847 (3,068) 33,392 (1,645) 32,692 14,237

TOTAL ASSETS LESS CURRENT LIABILITIES 21,083,847 449,038 22,645,392 517,973 22,714,692 24,276,237 PEDX3UADTDPOFRAFNNILINFORMATION FINANCIAL FORMA PRO UNAUDITED 3 APPENDIX

Non-current liabilities, excluding net assets 36— A3-6 — attributable to Unitholders Interest-bearing bank and other borrowings 4,776,065 224,751 (224,751) 10 6,356,065 257,194 (257,194) 10 6,426,065 8,006,065 1,580,000 11(a) 1,650,000 11(b) Due to the immediate holding company — 221,795 (221,795) 12 — 260,897 (260,897) 12 —— Derivative financial instruments 2,778 — 2,778 — 2,778 2,778

Deposits received 2,547 — 2,547 — 2,547 GROUP ENLARGED THE OF 2,547 Deferred tax liabilities 371,411 — 371,411 — 371,411 371,411 Total non-current liabilities 5,152,801 446,546 6,732,801 518,091 6,802,801 8,382,801

Total liabilities, excluding net assets attributable to Unitholders 5,270,710 449,753 6,866,560 519,879 6,937,260 8,533,110 Net assets/(liabilities) attributable to Unitholders 15,931,046 2,492 15,912,591 (118) 15,911,891 15,893,436 APPENDIX 3 UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Notes:

(1) The audited consolidated statement of financial position of the Regal REIT Group as at 31st December, 2012 has been extracted from the published annual report of the Regal REIT Group for the year ended 31st December, 2012.

(2a) The audited consolidated statement of financial position of the SW Target Group as at 31st December, 2012 has been extracted from the accountants’ report as set out in Appendix 2 to this Circular and all values are rounded to the nearest thousand.

(2b) The audited consolidated statement of financial position of the NP Target Group as at 31st December, 2012 has been extracted from the accountants’ report as set out in Appendix 2 to this Circular and all values are rounded to the nearest thousand.

(3) The adjustments represent:

(a) the reversal of the property under construction of HK$452.11 million of the SW Target Group as at 31st December, 2012. Since the property under construction forms part of the investment properties, the amount is reversed accordingly.

(b) the reversal of the property under construction of HK$519.62 million of the NP Target Group as at 31st December, 2012. Since the property under construction forms part of the investment properties, the amount is reversed accordingly.

(4) The adjustments represent:

(a) the acquisition of the Sheung Wan Hotel (including the agreed interior fit-out under the SW Interior Fit-Out Programme) at the SW Hotel Purchase Price of HK$1,580 million.

(b) the acquisition of the North Point Hotel (including the agreed interior fit-out under the NP Interior Fit-Out Programme) upon exercise of the North Point Hotel Option at the Final Exercise Price of HK$1,650 million.

For the purpose of preparing the unaudited pro forma consolidated statement of financial position, the SW Interior Fit-Out Programme and the NP Interior Fit-Out Programme are assumed to be completed as at 31st December, 2012.

(5) The adjustments represent directly attributable costs incurred for the SW Transaction and the NP Transaction of HK$2.61 million and HK$2.61 million, respectively.

(6) The fair values of the Sheung Wan Hotel and the North Point Hotel as at 31st December, 2012 are assumed to be HK$1,580 million, which is the appraised value of the Sheung Wan Hotel as at 25 June 2013, and HK$1,650 million, which is the appraised value of the North Point Hotel as at 25 June 2013. For the purpose of preparing the unaudited pro forma consolidated statement of financial position, the directly attributable transaction costs of the SW Transaction and the NP Transaction capitalised in investment properties would be reflected as fair value changes on investment properties.

(7) The adjustments represent additional payments of HK$139,000 and HK$143,000 for the Current Assets Adjustments upon completion of the SW Transaction and the NP Transaction pursuant to the Share Purchase Agreement and the Option Agreement, respectively.

— A3-7 — APPENDIX 3 UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(8) The adjustments represent the transfer of all liabilities other than the SW Shareholder Loan and the NP Shareholder Loan to P&R upon completion of the SW Transaction and the NP Transaction pursuant to the Share Purchase Agreement and the Option Agreement, respectively.

(9) The adjustments represent (i) acquisition fees of HK$15.8 million and HK$16.5 million paid to the REIT Manager, computed at 1% of the agreed purchase prices of the Sheung Wan Hotel and the North Point Hotel, respectively, in accordance with the provisions set out in the Trust Deed; and (ii) additional trustee fees of HK$50,000 and HK$50,000 paid to the Trustee in relation to the additional duties undertaken for the SW Transaction and the NP Transaction, respectively, in accordance with the provisions set out in the Trust Deed.

(10) The adjustments represent the discharge of the bank loans of the SW Target Group and the NP Target Group upon completion of the SW Transaction and the NP Transaction pursuant to the Share Purchase Agreement and the Option Agreement, respectively.

(11) The adjustments represent the drawdown of non-current bank and other borrowings through a combination of (i) new bank facilities secured against the Sheung Wan Hotel, the North Point Hotel and/or other assets held by the Regal REIT Group; and (ii) issuance of medium term notes under the Regal REIT MTN Programme to finance:

(a) the SW Hotel Purchase Price of HK$1,580 million; and

(b) the Final Exercise Price of the North Point Hotel Option of HK$1,650 million.

(12) The adjustments represent the assignment of the SW Shareholder Loan and the NP Shareholder Loan to the Regal REIT Group pursuant to the Share Purchase Agreement and the Option Agreement, respectively.

— A3-8 — B. Unaudited Pro Forma Consolidated Income Statement for the year ended 31st December, 2012 INFORMATION FINANCIAL FORMA PRO UNAUDITED 3 APPENDIX

The SW Transaction and the NP The SW Transaction The NP Transaction Transaction Unaudited pro forma income Unaudited pro Unaudited pro statement of the forma income forma income Enlarged Group statement of the statement of the after completion Enlarged Group Enlarged Group of the SW after completion after completion Transaction The Regal The SW Pro forma of the SW The NP Pro forma of the NP and the NP REIT Group Target Group adjustments Notes Transaction Target Group adjustments Notes Transaction Transaction HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) Note 1 Note 2a Note 2b

REVENUE Gross rental revenue 798,020 — 82,950 3(a) 880,970 — 86,625 3(b) 884,645 967,595 39— A3-9 — Gross hotel revenue 46,330 — 46,330 — 46,330 46,330

844,350 — 927,300 — 930,975 1,013,925 Property and hotel operating expenses (29,960) — (29,960) — (29,960) (29,960)

Net rental and hotel income 814,390 — 897,340 — 901,015 983,965 FTEELRE GROUP ENLARGED THE OF Other income 674 — 674 — 674 674 Depreciation (7,382) — (7,382) — (7,382) (7,382) Fair value changes on investment properties 3,068,038 — (2,605) 4 3,065,433 — (2,605) 4 3,065,433 3,062,828 REIT Manager fees (88,656) — (15,800) 5 (111,685) — (16,500) 5 (112,705) (135,734) (7,229) 6 (7,549) 6 Trust, professional and other expenses (10,862) (126) (50) 5 (11,283) (77) (50) 5 (11,245) (11,666) (245) 7 (256) 7 Finance costs - excluding distributions to Unitholders (132,473) — (47,400) 8 (179,873) — (49,500) 8 (181,973) (229,373) PEDX3UADTDPOFRAFNNILINFORMATION FINANCIAL FORMA PRO UNAUDITED 3 APPENDIX

PROFIT/(LOSS) BEFORE TAX AND DISTRIBUTIONS TO 31 — A3-10 — UNITHOLDERS 3,643,729 (126) 3,653,224 (77) 3,653,817 3,663,312

Income tax expense (94,930) — (4,673) 9 (99,603) — (4,880) 9 (99,810) (104,483)

PROFIT/(LOSS) FOR THE YEAR, BEFORE DISTRIBUTIONS TO UNITHOLDERS 3,548,799 (126) 3,553,621 (77) 3,554,007 3,558,829 FTEELRE GROUP ENLARGED THE OF Finance costs - distributions to Unitholders (410,436) — (410,436) — (410,436) (410,436)

PROFIT/(LOSS) FOR THE YEAR, AFTER DISTRIBUTIONS TO UNITHOLDERS 3,138,363 (126) 3,143,185 (77) 3,143,571 3,148,393 APPENDIX 3 UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Notes:

(1) The audited consolidated income statement of the Regal REIT Group for the year ended 31st December, 2012 has been extracted from the published annual report of the Regal REIT Group for the year ended 31st December, 2012.

(2a) The audited consolidated income statement of the SW Target Group for the year ended 31st December, 2012 has been extracted from the accountants’ report as set out in Appendix 2 to this Circular and all values are rounded to the nearest thousand.

(2b) The audited consolidated income statement of the NP Target Group for the year ended 31st December, 2012 has been extracted from the accountants’ report as set out in Appendix 2 to this Circular and all values are rounded to the nearest thousand.

(3) The adjustments represent:

(a) Upon completion of the SW Transaction, the Regal REIT Group, through the SW Property Company, will enter into a lease agreement (the “SW Lease”) with the Lessee in respect of the Sheung Wan Hotel. The SW Lease commences from the date of completion of the SW Transaction and ends on the 31st December immediately following the fifth anniversary of the SW Lease, which may be extended for a further five years at the sole discretion of the SW Property Company, with a fixed rent of 5%, 5.25% and 5.5% per annum of the SW Hotel Purchase Price on the completion date of the SW Transaction, which is assumed to be HK$1,580 million, in respect of the first, second and third years of the lease term, respectively, and a variable rent for the remaining lease term. Accordingly, a total rental income of HK$82.95 million is recognised in the unaudited pro forma consolidated income statement on the straight-line basis over the first three years of the lease term in accordance with the Regal REIT Group’s accounting policies.

(b) Upon completion of the NP Transaction, the Regal REIT Group, through the NP Property Company, will enter into a lease agreement (the “NP Lease”) with the Lessee in respect of the North Point Hotel. The NP Lease commences from the date of completion of the NP Transaction and ends on the 31st December immediately following the fifth anniversary of the NP Lease, which may be extended for a further five years at the sole discretion of the NP Property Company, with a fixed rent of 5%, 5.25% and 5.5% per annum of the Final Exercise Price on the completion date of the NP Transaction, which is assumed to be HK$1,650 million, in respect of the first, second and third years of the lease term, respectively, and a variable rent for the remaining lease term. Accordingly, a total rental income of HK$86.63 million is recognised in the unaudited pro forma consolidated income statement on the straight-line basis over the first three years of the lease term in accordance with the Regal REIT Group’s accounting policies.

(4) The fair values of the Sheung Wan Hotel and the North Point Hotel as at 31st December, 2012 are assumed to be HK$1,580 million, which is the appraised value of the Sheung Wan Hotel as at 25 June 2013, and HK$1,650 million, which is the appraised value of the North Point Hotel as at 25 June 2013, respectively. For the purpose of preparing the unaudited pro forma consolidated income statement, the directly attributable transaction costs of the SW Transaction and the NP Transaction of HK$2.61 million and HK$2.61 million, respectively, capitalised in investment properties would be reflected as the fair value changes on investment properties.

(5) The adjustments represent (i) acquisition fees of HK$15.8 million and HK$16.5 million paid to the REIT Manager, computed at 1% of the agreed purchase prices of the Sheung Wan Hotel and the North Point Hotel, respectively, in accordance with the provisions set out in the Trust Deed; and (ii) additional trustee fees of HK$50,000 and HK$50,000 paid to the Trustee in relation to the additional duties undertaken for the SW Transaction and the NP Transaction, respectively, in accordance with the provisions set out in the Trust Deed.

(6) The adjustments represent (i) additional base fees of HK$4.74 million and HK$4.95 million paid to the REIT Manager, computed at 0.3% of the increased carrying value of the deposited property of the Enlarged Group of HK$1,580 million and HK$1,650 million after the completion of the SW Transaction and the NP Transaction, respectively; and (ii) additional variable fees of HK$2.49 million and HK$2.60 million paid to the REIT Manager, computed at 3% of the rental income generated from the SW Lease and the NP Lease of HK$82.95 million and HK$86.63 million, respectively.

— A3-11 — APPENDIX 3 UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(7) The adjustments represent additional trustee fees of HK$245,000 and HK$256,000 paid to the Trustee, computed at 0.0155% of the increased carrying value of the deposited property of the Enlarged Group of HK$1,580 million and HK$1,650 million after the completion of the SW Transaction and the NP Transaction, respectively.

(8) The adjustments represent additional interest expenses arising from the drawdown of non-current bank and other borrowings through a combination of (i) new bank facilities secured against the Sheung Wan Hotel, the North Point Hotel and/or other assets held by the Regal REIT Group; and (ii) issuance of medium term notes under the Regal REIT MTN Programme to finance the SW Transaction and the NP Transaction. The amounts are calculated at an estimated average borrowing rate of 3%, with reference to the existing borrowing rate of the Regal REIT Group and borrowing rates in the market which the Regal REIT Group could reasonably tap into, on the estimated drawdown of non-current bank and other borrowings of approximately HK$1,580 million and HK$1,650 million to finance the SW Hotel Purchase Price and the Final Exercise Price of the North Point Hotel Option, respectively.

(9) The adjustments represent the income tax effect of the pro forma adjustments mentioned in (3), (6) and (8) above, calculated at the Hong Kong statutory tax rate of 16.5%.

(10) Apart from the above, no adjustments have been made to reflect any operating results or other transactions of the Enlarged Group entered into subsequent to 31st December, 2012. In respect of the above pro forma adjustments, the pro forma adjustments mentioned in (3), (6), (8) and (9) above are expected to have continuing effects.

— A3-12 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS 1(k),2(z)(iii)

A. INDEPENDENT PROPERTY VALUATION REPORT IN RESPECT OF THE SHEUNG WAN HOTEL

The following is the text of the Independent Property Valuation Report received from Savills Valuation and Professional Services Limited, prepared for the purpose of inclusion in this Circular, in connection with the valuation of the Sheung Wan Hotel on an as-completed basis as at 25 June 2013.

Savills Valuation and Professional Services Limited 23/F Two Exchange Square Central, Hong Kong

T: (852) 2801 6100 F: (852) 2530 0756

EA Licence: C-023750 savills.com

Regal Portfolio Management Limited (as manager of Regal REIT) (the “Manager”) Unit No. 1504, 15th Floor 68 Yee Wo Street Causeway Bay Hong Kong

DB Trustees (Hong Kong) Limited (as trustee of Regal REIT) (the “Trustee”) Level 52 International Commerce Centre 1 Austin Road West Kowloon Hong Kong

29 June 2013

Dear Sir / Madam

RE: VALUATION OF A PROPOSED HOTEL DEVELOPMENT AT 132-140 BONHAM STRAND, SHEUNG WAN, HONG KONG (THE “PROPERTY”)

In accordance with your instructions for us to value the Property, we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the Property, on an as-completed basis, as at 25 June 2013 (the “Date of Valuation”) for the purpose of incorporation in a circular.

— A4-1 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

Basis of Valuation

Our valuation of the Property is our opinion of its market value which we would define as intended to mean “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

Market value is understood as the value of an asset or liability estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

Our valuation of the Property is prepared in accordance with “The HKIS Valuation Standards (2012 Edition)” published by The Hong Kong Institute of Surveyors; and in compliance with the requirements contained in Chapter 5 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and paragraph 6.8 of the Code on Real Estate Investment Trusts issued by The Securities and Futures Commission in April 2013.

Valuation Approach

In the course of our valuation analysis, we have principally adopted the Income Capitalization — Discounted Cash Flow Analysis and counter-checked by the Direct Comparison Approach.

Income Capitalization — Discounted Cash Flow Analysis (“DCF”)

As the Property will be held for long term investment, we have adopted a 10-year projection time frame in our DCF. Such 10-year investment horizon enables an investor to make an assessment of the long-term return that is likely to be derived from the Property.

In preparing the DCF, the income and expenses for the next ten years from the Date of Valuation are itemized and projected annually taking into account the expected growth (or decline) of incomes and expenses. The net cash flow over the ten-year period is discounted at a discount rate. In undertaking this analysis, we have relied on our analysis of relevant general and economic conditions and of the business prospects of the Property. The discount rate adopted is 7.25% which reflects the time value of money in the DCF Analysis and a risk premium for the forecast cash flow to be materialized having regard to the risk free rate based on the prevailing yield of 10-year Hong Kong Exchange Fund Notes (approximately 1%), expected inflation (approximately 3% per annum) and the projected income over the forecast period.

The Property is hypothetically assumed to be sold at the end of the ten years period. The net cash flow of the Property from the 11th year onward to the unexpired term of the Government lease is capitalized at a terminal yield expected for this type of property investment in the market. Due consideration has been given to the expectation of the renewal of the Government lease upon expiry. The terminal capitalization rate adopted is 4.25% mainly taking into account the yields achieved in analyzed market sale of hotel premises and our knowledge of the market expectation from our day-to-day contact with property investors. This expected return reflects implicitly the quality of the investment, the expectation of the potential of future rental growth and capital appreciation, risk factor and the like. The capitalized future value is discounted at the discount rate.

— A4-2 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

We considered DCF is the most appropriate valuation approach for assessing the market value of the Property as it would better reflect specific characteristics of the income-producing properties such as the fixed and reversionary rents, lease duration, hotel management arrangement, room rate growth, occupancy rates and all outgoings.

DCF is subject to various assumptions including incomes and expenses of the Property and future economic conditions in the markets. The income and expense figures are mathematically extended and are fully dependent upon the accuracy of the assumptions as to incomes, expenses and market conditions.

Direct Comparison Approach

As a supporting approach to our valuation, we have considered the Direct Comparison Approach as a reference check for the valuation arrived from DCF. In this regard, comparable sale transactions around the Date of Valuation are collected and analyzed in term of a price per square foot. The rationale of this approach is to directly compare the market comparable transactions with a property to determine the market value. Appropriate adjustments are applied to the comparable transactions to adjust for the discrepancies between a property and the comparables.

Title Investigation

We have not been provided with extracts from title documents relating to the Property but we have caused searches to be made at the Land Registry. We have not, however, searched the original documents to verify ownership or to ascertain the existence of any amendment which does not appear on the copies handed to us. We do not accept a liability for any interpretation which we have placed on such information which is more properly the sphere of your legal advisers.

Source of Information

We have relied to a very considerable extent on information given by the Manager and have accepted advice to us on such matters as proposed lease agreement, proposed hotel management agreement, planning approvals, statutory notices, easements, tenure, building plans, site and floor areas and all other relevant matters. We have no reason to doubt the truth and accuracy of the information provided to us by the Manager, and have been advised by the Manager that no material facts have been omitted from the information provided.

Site Measurement

We have not been able to carry out detailed site measurement to verify the correctness of the site area of the Property but have assumed that the site area shown on the documents handed to us is correct. Dimensions, measurements and areas included in the valuation report are based on information contained in the documents provided to us by the Manager and are therefore only approximations.

— A4-3 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

Site Inspection

We have inspected the Property externally. However, we have not been able to carry out investigations on the site to determine the suitability of the ground conditions and services etc. Our valuation is prepared on the assumption that these aspects are satisfactory. Our inspection was carried out by Mr. Martin Wong, MRICS, on 11 April 2013.

Valuation Assumptions

Unless otherwise stated, our valuation has been made on the assumption that the Property can be sold in the prevailing market without the benefit of any deferred term contracts, leasebacks, joint ventures, or any similar arrangements which would affect its market value of the Property.

No allowance has been made in our report for any charge, mortgage or amount owing on the Property nor for any expense or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Property is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

We have been provided with a set of building plans for the Property regarding its proposed hotel development (the “Development Scheme”). Our valuation is based on the assumption that the Property is fully developed and completed in accordance with the Development Scheme and available for immediate occupation as at the Date of Valuation and that valid occupation permit and all relevant government approvals, licences and permits have been obtained.

As advised by the Manager, it is assumed that the Property, upon completion, will be a hotel up to the standard of Wanchai Regal iClub Hotel. Wanchai Regal iClub Hotel is a High Tariff B hotel with 99 guestrooms and a total Gross Floor Area of 5,326 sq. m. located in Wanchai.

Our valuation has been made on the assumption that the Property is subject to a master lease (the “Master Lease”) and a hotel management agreement (the “HMA”).

The Master Lease commences from the Date of Valuation and will terminate on the 31 December immediately following the fifth anniversary of the date of the commencement, unless extended for a further five years at the lessor’s sole discretion. The annual rent payable in respect of the first, second and third years of the lease term shall be 5.00%, 5.25% and 5.50% respectively of the SW Hotel Purchase Price (i.e. HK$1,580 million). The rent payable in respect of the remaining lease term shall be determined based on an annual market rental review performed by an independent professional property valuer who will be jointly appointed by the lessor and the lessee.

The HMA is for a term of ten years commencing from the Date of Valuation. The hotel manager under the HMA is entitled to payment by the lessee of a hotel management fee comprising of:

(a) a base fee which is equal to (i) 1% of gross revenue derived from the Property (for so long as the Master Lease is in subsistence); or (ii) 2% of gross revenue derived from the Property (for other cases during the operating term of the HMA); and

— A4-4 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

(b) an incentive fee which is equal to (i) 1% of the excess of the Adjusted GOP derived from the Property over the base fee and the fixed charges (for so long as the Master Lease is in subsistence); or (ii) 5% of the excess of the Adjusted GOP derived from the Property over the base fee and the fixed charges (for other cases during the operating term of the HMA).

In addition, we have made the following assumptions in our valuation:-

• All information on the Property provided by the Manager is correct.

• The Property will be developed without payment of any extra land premium, land use rights fees or other onerous monies.

• The Property will be constructed, occupied and used in full compliance with, and without contravention of, all ordinances and regulations except only where otherwise stated.

Valuer’s interest

We hereby certify that we have no present or prospective interest in the Property and are not a related corporation of nor have a relationship with the Manager, the trustee of Regal REIT or any other party or parties with whom Regal REIT is contracting; and we are authorized to practice as valuer and have the necessary expertise and experience in valuing similar types of properties.

We hereby confirm that our valuation has been prepared on a fair and unbiased basis.

We enclose herewith our valuation report.

Yours faithfully For and on behalf of Savills Valuation and Professional Services Limited Charles C K Chan MSc FRICS FHKIS MCIArb RPS(GP) Managing Director

Note: Mr. Charles C K Chan is a Chartered Estate Surveyor and has about 28 years’ experience in the valuation of properties in Hong Kong and the PRC.

— A4-5 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

PROPERTY

A Proposed Hotel Development at 132-140 Bonham Strand Sheung Wan Hong Kong

Section C of Marine Lot No. 67A, Section A of Sub-section 1 of Section A of Marine Lot No. 67, The Remaining Portion of Sub-section 1 of Section A of Marine Lot No. 67, Section A of Sub-section 1 of Section B of Marine Lot No. 67, The Remaining Portion of Sub-section 1 of Section B of Marine Lot No. 67, Sub-section 2 of Section B of Marine Lot No. 67, The Remaining Portion of Section B of Marine Lot No. 67, Sub-section 1 of Section C of Marine Lot No. 67, The Remaining Portion of Section C of Marine Lot No. 67, Section G of Inland Lot No. 66 and The Remaining Portion of Inland Lot No. 66

1. DESCRIPTION OF PROPERTY

The Property is a proposed 34-storey hotel development expected to be completed in the 4th quarter of 2013. According to a set of building plans provided, upon completion of the hotel development, the Property will comprise 248 guestrooms and suites.

The Property is located at Sheung Wan, a well-established commercial cum residential area. The locality is located close to Central, a prime and traditional Central Business District in Hong Kong. The immediately locality is predominantly office and residential buildings.

Site Area1 : 472 sq. m. Gross Floor Area : 7,197 sq. m. Covered Floor Area : Approx. 9,617 sq. m. Town Planning Zoning : “Commercial” zone under Sai Ying Pun & Sheung Wan Outline Zoning Plan No. S/H3/28 dated 12 October 2012.

Hotel Guestroom Configuration

According to the information provided, the Property will comprise 248 guestrooms including 223 standard rooms, 18 one-bedroom suites and 7 two-bedroom suites.

1 The site area excludes an area of 32.803 sq. m. to be reserved for lane pattern but includes an area of 24.398 sq. m. to be surrendered for road widening.

— A4-6 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

Facilities

A lobby lounge and a business centre.

2. OWNERSHIP AND TENURE

Registered Owner : Tristan Limited Lease Term : Marine Lot No. 67 and Marine Lot No. 67A are held under respective Government Leases for a common term of 999 years commencing from 7 February 1852. Inland Lot No. 66 is held under a Government Lease for a term of 999 years commencing from 26 March 1868. Government Rent : The total government rent payable for the lots of the Property is HK$120 per annum.

Major Registered Encumbrance

i. Offensive Trade Licence by District Lands Officer, Hong Kong West & South dated 12 December 2011, registered vide memorial no. 12022300500014. (For Section C of Marine Lot No. 67A, Section A of Sub-section 1 of Section A of Marine Lot No. 67, The Remaining Portion of Sub-section 1 of Section A of Marine Lot No. 67, Section A of Sub-section 1 of Section B of Marine Lot No. 67, The Remaining Portion of Sub-section 1 of Section B of Marine Lot No. 67,The Remaining Portion of Section B of Marine Lot No. 67, Sub-section 1 of Section C of Marine Lot No. 67, The Remaining Portion of Section C of Marine Lot No. 67 and The Remaining Portion of Inland Lot No. 66 only)

ii. Government Notice No. 7420 of 11.11.2011 pursuant to Section 22(1) of the Government Rent and Premium (Apportionment) Ordinance (Cap. 125) dated 11 November 2011, registered vide memorial no. 11111702560010. (For Section C of Marine Lot No. 67A only)

iii. Debenture and Mortgage dated 2 November 2011 in favour of The Hongkong and Shanghai Banking Corporation Limited, registered vide memorial no. 11111002510443. (For all lots of the Property)

iv. Deed Poll dated 15 August 2011, registered vide memorial no. 11082501800017. (Section A of Sub-section 1 of Section A of Marine Lot No. 67, The Remaining Portion of Sub-section 1 of Section A of Marine Lot No. 67, Section A of Sub-section 1 of Section B of Marine Lot No. 67, The Remaining Portion of Sub-section 1 of Section B of Marine Lot No. 67, Sub-section 2 of Section B of Marine Lot No. 67, The Remaining Portion of Section B of Marine Lot No. 67, Sub-section 1 of Section C of Marine Lot No. 67, The Remaining Portion of Section C of Marine Lot No. 67, Section G of Inland Lot No. 66 and The Remaining Portion of Inland Lot No. 66 only)

— A4-7 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

v. Government Notice No. 1100 of 18.2.2011 pursuant to Section 22(1) of the Government Rent and Premium (Apportionment) Ordinance (Cap. 125) dated 18 February 2011, registered vide memorial no. 11030101830019. (For Section A of Sub-section 1 of Section A of Marine Lot No. 67, The Remaining Portion of Sub-section 1 of Section A of Marine Lot No. 67, Section A of Sub-section 1 of Section B of Marine Lot No. 67, The Remaining Portion of Sub-section 1 of Section B of Marine Lot No. 67, Sub-section 2 of Section B of Marine Lot No. 67, The Remaining Portion of Section B of Marine Lot No. 67, Sub-section 1 of Section C of Marine Lot No. 67 and The Remaining Portion of Section C of Marine Lot No. 67 only)

vi. Government Notice No. 2710 of 21.7.1995 pursuant to Section 22(1) the Crown Rent and Premium (Apportionment) Ordinance (Cap. 125) dated 21 July 1995, registered vide memorial no. UB6352712. (For Section G of Inland Lot No. 66 and The Remaining Portion of Inland Lot No. 66 only)

3. ASSUMED LEASE AGREEMENT

As instructed, it is assumed that the Property is subject to the Master Lease. The Master Lease commences from the Date of Valuation and will terminate on the 31 December immediately following the fifth anniversary of the date of the commencement, unless extended for a further five years at the lessor’s sole discretion. The annual rent payable in respect of the first, second and third years of the lease term shall be 5.00%, 5.25% and 5.50% respectively of the SW Hotel Purchase Price (i.e. HK$1,580 million). The rent payable in respect of the remaining lease term shall be determined based on an annual market rental review performed by an independent professional property valuer who will be jointly appointed by the lessor and the lessee.

4. ASSUMED HOTEL MANAGEMENT AGREEMENT

As instructed, it is assumed that the Property is subject to the HMA. The HMA is for a term of ten years commencing from the Date of Valuation. The hotel manager under the HMA is entitled to payment by the lessee of a hotel management fee comprising of:

— A4-8 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

5. HOTEL MARKET ANALYSIS

Over 2012, visitor arrivals recorded a robust 16.0% year-on-year growth rate, with 48.6 million visitors arriving in Hong Kong. The majority of visitors came from the mainland, representing 71.8% of visitors (34.9 million), and their staggering 24.2% year-on-year growth rate is the only above-average growth among major markets of origin. For the first time, the number of same-day mainland visitors surpassed their overnight counterparts in 2012, standing at 19.8 million (56.7% of total mainland arrivals)2.

Overnight visitors from the Americas were the highest spenders on hotel bills at over HK$3,700 per capita, followed by European and Australian/New Zealand hotel guests in 2012. While still spending the majority of their budgets on shopping (71% in 2012), mainland travellers’ aspirations for personal style and leisure mean that they are willing to stay at higher grade and more expensive hotels for a more comfortable and rounded travel experience, with their spending on hotel bills standing at slightly over HK$1,000 per capita in the same year3.

In 2012, with the increasing number of visitor arrivals and their changing travelling patterns, especially mainland tourists who are moving towards leisure travel experiences, demand for hotel rooms surged, with room rates increasing by 9.8% to stand at HK$1,489 per night. With an estimated net increase of 4,564 rooms from 2011 to 2012, and thus alleviating the limited availability issue, hotel occupancy rates remained at 89%, the highest over the past two decades. Revenue per available room (RevPAR) improved by 9.8% in 2012 and amounted to HK$1,325 per night as a result, 24% higher than the previous peak in 19964.

Hong Kong’s hospitality industry outlook over the next few years remains optimistic, as a number of positive influences will continue to have an impact on the sector. Leisure travellers will be drawn to Hong Kong by the recently completed and ongoing extensions of both Disneyland and Ocean Park, as well as the first berth of the cruise terminal at Kai Tak which is due to open in 2013. The appeal of Hong Kong for mainland Chinese as China’s most cosmopolitan and prosperous city is expected to endure, in particular for the more affluent and mature groups who now aim for a more complete travel experience and are willing to spend more on hotels and sightseeing. Other factors, such as rising incomes, improving employment prospects, a more global perspective and more leisure time, should also ensure a continuing flow of visitors from across Asia.

The number of business travellers is also expected to increase, alongside Hong Kong’s strengthening role in the Pearl River Delta, China’s wealthiest and most advanced region. Hong Kong is increasingly becoming economically integrated with China and today plays an important role as a finance, logistics and business services hub.

2 Source: Hong Kong Tourism Board (HKTB), Visitor Arrival Statistics — December 2012. 3 Source: HKTB, Tourist Expenditure Associated to Inbound Tourism 2012. 4 Source: HKTB, Hotel Room Occupancy Report — December 2012.

— A4-9 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

According to a recent Hong Kong Trade Development Council (HKTDC) survey5, Hong Kong emerged as the most preferred CBD among ten Asian cities6. Hong Kong’s excellent geographical location, low risk, ease of doing business and strong institutional structure, to name but a few, were all cited as important factors. All of these positive attributes will continue to strengthen Hong Kong’s position as a place for doing regional business and should therefore induce an increasing number of overnight business travellers.

Hong Kong’s current transport infrastructure projects will make cross-border travel easier as well as improving mobility within the territory itself. These include the Hong Kong section of the Guangzhou—Shenzhen—Hong Kong Express Rail Link, the Hong Kong—Zhuhai—Macao Bridge, a rail connection between the Hong Kong and Shenzhen airports, the South Island Line (rail), the Sha Tin—Central Link (rail), the Tuen Mun—Chek Lap Kok Link and the Tuen Mun Western Bypass.

However, hotel supply is not expected to keep pace with demand, particularly in core tourist areas where site availability is the key constraint of future hotel development. Therefore, we expect both hotel occupancy and room rates to continue to flourish in 2013, but with occupancy rates already at high levels (89%), we expect further improvements in RevPAR to be driven by growth in room rates.

The Property is located in Sheung Wan, offering convenient access to core business districts as well as major shopping and tourist areas. The tram stations on Des Voeux Road West and the Mass Transit Railway (MTR) Sheung Wan Station are within a ten-minute walk of the Property, which is also accessible by taxis, buses and minibuses.

The Hong Kong-Macau Ferry terminal, also a ten-minute walk from the Property, provides ferry and helicopter services to Macau, and ferry services to a number of cities in southern China including Zhongshan, Zhuhai and Panyu in Guangzhou, and Shekou in Shenzhen. Tsim Sha Tsui and Kowloon Station are both 15-minute drives from the Property via the Western Harbour Crossing.

The MTR West Island Line (WIL), to be completed in 2014, will be 3-km long with three new stations (including Sai Ying Pun Station, University Station and Kennedy Town Station). The WIL is expected to provide the impetus for the rejuvenation of traditional districts around the Property as a rise in economic activity and redevelopment are expected with the improvement in traffic conditions.

5 Hong Kong as Asia’s Central Business District, HKTDC Research, November 2012. 6 The ten cities include Hong Kong, Singapore, Shanghai, Tokyo, Beijing, Guangzhou, Taipei, Seoul, Kuala Lumpur and Bangkok.

— A4-10 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

The Property is close to a number of high-quality Grade A office buildings located in Sheung Wan including The Center, 181 Queen’s Road Central and Cosco Tower.

The Property is also close to a number of tourist attractions, including Bonham Strand West (known for its specialty stores, quality dried foods and Chinese medicines), Des Voeux Road West (famous for its specialty stores selling varieties of exotic dried seafood) and Western Market (one of the oldest heritage buildings in Hong Kong, renovated in 1991 with themed shops).

Three hotels, providing 991 hotel rooms, were completed in Sheung Wan in 2012 — the Butterfly On Hollywood (142 rooms), IBIS Hong Kong Central & Sheung Wan (550 rooms) and Holiday Inn Express Hong Kong Soho (299 rooms). These three hotels are operated by chained hotel operators and have a similar target customer to the Property. In 2013, there will be two hotels completed, namely The Kush Hotel (199 rooms) and a proposed hotel at 23-25 Queen’s Road West and 30 Bonham Strand West (54 rooms)7. Although the latter hotel may pose little threat to the Property due to its small size, the former hotel may have some overlap of customer mix with the Property given its location and size.

The adequate hotel supply in the short term will balance the generally positive outlook of the overall hotel industry and the strategic location of the Property in Sheung Wan. It is expected that the general trend in both occupancy and room rates, and thus RevPAR, at the Property will follow the overall hotel market in 2013.

6. ESTIMATED NET PROPERTY YIELD8

5.0%

7. MARKET VALUE ON AN AS-COMPLETED BASIS AS AT 25 JUNE 2013

HK$1,580,000,000

7 Source: HKTB, Hotel Supply Situation — as at December 2012. 8 The Estimated Net Property Yield of the Property is derived from the fixed rental receivable in the first year of the term of the Master Lease divided by the Market Value.

— A4-11 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

B. INDEPENDENT PROPERTY VALUATION REPORT IN RESPECT OF THE NORTH POINT HOTEL

The following is the text of the Independent Property Valuation Report received from Savills Valuation and Professional Services Limited, prepared for the purpose of inclusion in this Circular, in connection with the valuation of the North Point Hotel on an as-completed basis as at 25 June 2013.

Savills Valuation and Professional Services Limited 23/F Two Exchange Square Central, Hong Kong

T: (852) 2801 6100 F: (852) 2530 0756

EA Licence: C-023750 savills.com

Regal Portfolio Management Limited (as manager of Regal REIT) (the “Manager”) Unit No. 1504, 15th Floor 68 Yee Wo Street Causeway Bay Hong Kong

DB Trustees (Hong Kong) Limited (as trustee of Regal REIT) (the “Trustee”) Level 52 International Commerce Centre 1 Austin Road West Kowloon Hong Kong

29 June 2013

Dear Sir / Madam

RE: VALUATION OF A PROPOSED HOTEL DEVELOPMENT AT 14-20 MERLIN STREET, NORTH POINT, HONG KONG (THE“PROPERTY”)

— A4-12 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

Basis of Valuation

Market value is understood as the value of an asset or liability estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

Valuation Approach

In the course of our valuation analysis, we have principally adopted the Income Capitalization — Discounted Cash Flow Analysis and counter-checked by the Direct Comparison Approach.

Income Capitalization — Discounted Cash Flow Analysis (“DCF”)

— A4-13 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

Direct Comparison Approach

Title Investigation

Source of Information

Site Measurement

— A4-14 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

Site Inspection

Valuation Assumptions

Our valuation has been made on the assumption that the Property is subject to a master lease (the “Master Lease”) and a hotel management agreement (the “HMA”).

The Master Lease commences from the Date of Valuation and will terminate on the 31 December immediately following the fifth anniversary of the date of the commencement, unless extended for a further five years at the lessor’s sole discretion. The annual rent payable in respect of the first, second and third years of the lease term shall be 5.00%, 5.25% and 5.50% respectively of the Initial Exercise Price (i.e. HK$1,650 million; Initial Exercise Price is adopted instead of Final Exercise Price since the later has not yet been determined). The rent payable in respect of the remaining lease term shall be determined based on an annual market rental review performed by an independent professional property valuer who will be jointly appointed by the lessor and the lessee.

The HMA is for a term of ten years commencing from the Date of Valuation. The hotel manager under the HMA is entitled to payment by the lessee of a hotel management fee comprising of:

— A4-15 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

In addition, we have made the following assumptions in our valuation:-

• All information on the Property provided by the Manager is correct.

• The Property will be developed without payment of any extra land premium, land use rights fees or other onerous monies.

• The Property will be constructed, occupied and used in full compliance with, and without contravention of, all ordinances and regulations except only where otherwise stated.

Valuer’s interest

We hereby confirm that our valuation has been prepared on a fair and unbiased basis.

We enclose herewith our valuation report.

Yours faithfully For and on behalf of Savills Valuation and Professional Services Limited Charles C K Chan MSc FRICS FHKIS MCIArb RPS(GP) Managing Director

Note: Mr. Charles C K Chan is a Chartered Estate Surveyor and has about 28 years’ experience in the valuation of properties in Hong Kong and the PRC.

— A4-16 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

PROPERTY

A Proposed Hotel Development at 14-20 Merlin Street North Point Hong Kong

The Remaining Portion of Section P of Inland Lot No. 2273, The Remaining Portion of Sub-section 1 of Section P of Inland Lot No. 2273, The Remaining Portion of Sub-section 1 of Section H of Inland Lot No. 2273 and The Remaining Portion of Section H of Inland Lot No. 2273

1. DESCRIPTION OF PROPERTY

The Property is a proposed 32-storey hotel development expected to be completed in the 2nd quarter of 2014. According to a set of building plans provided, upon completion of the hotel development, the Property will comprise 338 guestrooms.

The Property is located at North Point, a well-established residential area. The immediate locality is predominantly residential buildings intermingled with office buildings and hotel developments.

Site Area : 457 sq. m. Gross Floor Area : 6,849 sq. m. Covered Floor Area : Approx. 9,393 sq. m. Town Planning Zoning : “Commercial / Residential” zone under North Point Outline Zoning Plan No. S/H8/24 dated 30 November 2010.

Hotel Guestroom Configuration

According to the information provided, the Property will comprise 338 guestrooms.

Facilities

A lobby lounge and a business centre.

— A4-17 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

2. OWNERSHIP AND TENURE

Registered Owner : Wise Decade Investments Limited Lease Term : The Property is held from the Government for the residue of the respective further terms of 75 years, 75 years, 75 years and 75 years all commencing from the 25th day of August 1994 under four several new Government Leases in respect of The Remaining Portion of Section P of Inland Lot No.2273, The Remaining Portion of Subsection 1 of Section P of Inland Lot No.2273, The Remaining Portion of Subsection 1 of Section H of Inland Lot No.2273 and The Remaining Portion of Section H of Inland Lot No.2273 respectively deemed to have been granted under and by virtue of the Government Leases Ordinance (Chapter 40 of the Laws of Hong Kong) upon the expiration of the initial term of 75 years created by the original Government Lease of Inland Lot No.2273 dated 2nd April 1925 made between the late King George V of the one part and The Asiatic Petroleum Company (South China) Limited of the other part. Government Rent : The total government rent payable for the lots of the Property is HK$61,150 per annum.

Major Registered Encumbrance

i. Offensive Trade Licence from District Lands Office, Hong Kong East dated 20 July 2012, registered vide memorial no. 12082101060027.

ii. Debenture and Mortgage dated 29 August 2012 in favour of Australia and New Zealand Banking Group Limited, registered vide memorial no. 12091102440099.

3. ASSUMED LEASE AGREEMENT

As instructed, it is assumed that the Property is subject to the Master Lease. The Master Lease commences from the Date of Valuation and will terminate on the 31 December immediately following the fifth anniversary of the date of the commencement, unless extended for a further five years at the lessor’s sole discretion. The annual rent payable in respect of the first, second and third years of the lease term shall be 5.00%, 5.25% and 5.50% respectively of the Initial Exercise Price (i.e. HK$1,650 million; Initial Exercise Price is adopted instead of Final Exercise Price since the later has not yet been determined). The rent payable in respect of the remaining lease term shall be determined based on an annual market rental review performed by an independent professional property valuer who will be jointly appointed by the lessor and the lessee.

— A4-18 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

4. ASSUMED HOTEL MANAGEMENT AGREEMENT

5. HOTEL MARKET ANALYSIS

1 Source: Hong Kong Tourism Board (HKTB), Visitor Arrival Statistics — December 2012. 2 Source: HKTB, Tourist Expenditure Associated to Inbound Tourism 2012. 3 Source: HKTB, Hotel Room Occupancy Report — December 2012.

— A4-19 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

According to a recent Hong Kong Trade Development Council (HKTDC) survey4, Hong Kong emerged as the most preferred CBD among ten Asian cities5. Hong Kong’s excellent geographical location, low risk, ease of doing business and strong institutional structure, to name but a few, were all cited as important factors. All of these positive attributes will continue to strengthen Hong Kong’s position as a place for doing regional business and should therefore induce an increasing number of overnight business travellers.

The Property is located in North Point, one of the key decentralised business districts and a well-established residential area on Hong Kong Island. North Point benefits from extensive transport links such as the Eastern Corridor, providing convenient access to the rest of the territory. The Mass Transit Railway’s (MTR) Fortress Hill Station is a five-minute walk from the Property and the Tin Hau MTR Station is also nearby, which is also accessible by taxis, buses and trams.

4 Hong Kong as Asia’s Central Business District, HKTDC Research, November 2012. 5 The ten cities include Hong Kong, Singapore, Shanghai, Tokyo, Beijing, Guangzhou, Taipei, Seoul, Kuala Lumpur and Bangkok.

— A4-20 — APPENDIX 4 INDEPENDENT PROPERTY VALUER’S VALUATION REPORTS

The Property is close to several office developments, such as 169 Electric Road, AIA Tower, Fortress Tower and Citicorp Centre. Recreational facilities such as Victoria Park, the Hong Kong Stadium and the Happy Valley Race Course are accessible via MTR and buses. The neighbouring district (only two stations away on the MTR) Causeway Bay, is a world-class retail destination, with key shopping developments such as Times Square, Lee Gardens, Hysan Place and SOGO Department Store. Quarry Bay is one MTR station away from North Point and is another key decentralised business district comprising the significant Island East office development.

Twenty One Whitfield6, a boutique hotel with 54 rooms, was the only new hotel in North Point completed in 2012. Due to its smaller size and different market positioning — offering long-stay packages to business travellers from the neighbouring office cluster — compared with the Property, it is not expected to pose any significant competition. Between 2013 and 2017, four more hotels will open in the vicinity, namely the 92-room hotel at 118-120 Electric Road, the 68-room hotel at 14-16 Tsing Fung Street, the 36-room hotel at 9-11 Wing Hing Street and a proposed hotel on Oil Street (840 rooms). In the longer term, the western part of the ex-North Point Estate Site (IL 9020), will be developed into another hotel project, but no detailed information is available at this stage. The hotel projects on Oil Street and the ex-North Point Estate Site will be large-scale projects, targeting first-tier, high-end budget business travellers, as well as long-haul tourists. As such, these two future hotels are positioned differently to the Property and therefore are not expected to compete with the Property to a significant extent. Newton Hotel (362 rooms), located at 218 Electric Road, will pose some threat to the Property as it is located only one street block away and has a similar number of hotel rooms. As with the Property, Newton Hotel is a chain hotel and is a local brand operator. As compared with the Property, located at No. 8 Wing Hing Street, the 280-room Empire Hotel is a competitive hotel just four street blocks away from the Property. Catered for business travellers and international tourists, the Empire Hotel is of comparable size to the Property and is managed by a chain operator.

Based on the generally positive outlook of the overall hotel industry and balanced supply situation in the next few years, as well as the strategic location of the Property, welcoming both business and leisure travellers, it is expected that the growth in both occupancy and room rates, as well as RevPAR, at the Property will be in line with the overall hotel market in 2013.

6. ESTIMATED NET PROPERTY YIELD7

5.0%

7. MARKET VALUE ON AN AS-COMPLETED BASIS AS AT 25 JUNE 2013

HK$1,650,000,000

6 Source: HKTB, Hotel Supply Situation — as at December 2012. 7 The Estimated Net Property Yield of the Property is derived from the fixed rental receivable in the first year of the term of the Master Lease divided by the Market Value.

— A4-21 — APPENDIX 5 MARKET CONSULTANT’S REPORT 2(z)(iii)

The following is the text of the text of a letter received from Colliers International (Hong Kong) Limited, the Market Consultant, for the purpose of inclusion in this circular.

29 June 2013

REGAL PORTFOLIO MANAGEMENT LIMITED UNIT NO. 1504, 15TH FLOOR, 68 YEE WO STREET, CAUSEWAY BAY, HONG KONG (AS “MANAGER” OF REGAL REIT)

AND

DB TRUSTEES (HONG KONG) LIMITED LEVEL 52, INTERNATIONAL COMMERCE CENTRE, 1 AUSTIN ROAD WEST, KOWLOON, HONG KONG (AS “TRUSTEE” OF REGAL REIT)

DEAR SIR/MADAM,

Re: Market Consultant’s Report

As requested, we have prepared a Hong Kong Hotel Market Overview for Regal Portfolio Management Limited, in its capacity as the manager of Regal REIT. The report includes a market overview of the hotel industry in Hong Kong and an assessment of the two hotel properties to be acquired by Regal REIT. The two hotel properties are located in Sheung Wan and North Point.

1. An Overview of Hong Kong’s Economic Environment

Hong Kong has the freest economy in the world, according to the 2013 Index of Economic Freedom. It has held this title since the inception of the index in 1995 by The Heritage Foundation. As one of the world’s leading international financial centres, Hong Kong’s service oriented economy is characterised by low taxation, near-free port trade and a well-established international financial market. Hong Kong’s economic strengths, including a sound banking system, virtually no public debt, a strong legal system, ample foreign exchange reserves, rigorous anti-corruption measures and close connections with Mainland China, enable it to respond quickly to changing circumstances in economic cycles.

— A5-1 — APPENDIX 5 MARKET CONSULTANT’S REPORT

The Hong Kong SAR government positioned the four pillar economic sectors of Hong Kong in 2011, which are as follows: trading and logistics (25.5% of GDP in terms of value-added in 2011), tourism (4.5%), financial services (16.1%), and professional services and other producer services (12.4%). There are also six industries which have been identified for which Hong Kong has clear advantages for further development. These include cultural and creative, medical services, education services, innovation and technology, testing and certification services and environmental industries. These six industries accounted for 8.5% of GDP in terms of value-added in 2011.

1.1 Economic Performance

Key Economic Indicators

2010 2011 2012 Forecast/Latest

Population, mid-year (million) 7.02 7.07 7.15 7.17 (a) Gross Domestic Product (US$billion) 227.8 248.2 261.8 273.6-278.8 (b) GDP Per Capita (US$) 32,400 35,100 36,600 37,900-38,600 (b) Real GDP Growth (%) +6.8 +4.9 +1.5 +1.5 — 3.5 (b) Inflation (% change in composite CPI) +2.4 +5.3 +4.1 +3.8 (c) Unemployment rate, seasonally adjusted (%) 4.3 3.4 3.3 3.5 (d) Retail Sales Growth (%) +18.3 +24.9 +9.8 +13.9 (e) Visitor Arrival Growth (%) +21.8 +16.4 +16.0 +13.5 (e)

(a) end-2012 (b) government forecast for 2013 (c) YoY change for January-April 2013 (d) February-April 2013 (e) YoY change in January-March 2013

Source: HKTDC

The Hong Kong economy grew at a relatively modest pace in 2012, posting growth of 1.5% after the above-trend growth of 4.9% in 2011. The slowdown was weighed upon by weak external demand amid a continued difficult global economic environment. This was characterised by the lingering debt crisis in the euro zone and a fragile recovery of the major advanced economies. In 2012, the total exports of goods and services increased by only 1.8% and 1.9% respectively, both in real terms. However, the overall economic performance was cushioned by domestic demand holding up fairly well. Hong Kong’s private consumption expenditure grew by 3.2% in real terms in 2012 while investment spending registered a growth of 9.4%. This was driven by stable income and employment conditions, a large amount of public infrastructure work and private consumption projects.

— A5-2 — APPENDIX 5 MARKET CONSULTANT’S REPORT

During the first quarter of 2013, there was a sign of recovery for Hong Kong’s economy. The economy continued to grow moderately in the first quarter of 2013, by 2.8% in real terms over a year earlier, after growing by 1.5% in 2012. Domestic demand is likely to record a positive trend, as reflected in reports on employment data, the purchasing managers’ survey and retail sales. Private consumption expenditure accounts for two-thirds of GDP in Hong Kong and consumer spending remains important to Hong Kong’s economy.

In the first quarter of 2013, the total exports of goods grew by 8.8% in real terms over a year earlier. While the Mainland and some other Asian markets saw solid growth, the advanced markets remained the weak spots, with exports to US, EU and Japan all posting different extents of YoY decline in the first quarter. Exports of services picked up to a 4.9% YoY growth over the same period, under the support of vibrant inbound tourism and improved financial market activity.

The prospects of the US and Japan are turning more favourable, with both countries’ economies benefiting from the effects of fiscal stimulus plans. Japan has also been benefited from a sharp depreciation of the Yen. Large scale projects in Mainland China are expected to pick up after the appointment of new ministers and provincial level leaders after the 12th National People’s Congress. China’s exports are expected to increase in the second half of the year, with these factors contributing to the moderate outlook for growth.

As mentioned above, Hong Kong’s domestic demand is likely to record a positive performance so far in 2013. Taking into account the seasonal variation for January to April in 2013, retail sales value and volume grew at a faster pace of 15.5% YoY and 15.1% YoY respectively for the four months combined. Notable increases in sales volume were recorded for consumer durable goods (+44.8%) which includes automobiles, electrical goods and photographic equipment and for jewellery and watches (+68.8%). The tight labour market and good performance in the tourism sector also supported this. Overall, the government has forecasted Hong Kong’s economy to expand by 1.5-3.5% in 2013 in the round of forecasting exercises in May 2013.

1.2 An Overview of China’s Economic Environment

Since initiating market reforms in 1978, China has shifted from a centrally planned to a market based economy and experienced rapid economic and social development. Nowadays China is one of the world’s top exporters and is attracting record amounts of foreign investments. In turn, it is investing billions of dollars abroad. The collapse in international export markets that accompanied the global financial crisis of 2009 initially had a large impact on China, however its economy was among the first globally to rebound and quickly returned to growth. In 2011, it formally overtook Japan to become the world’s second largest economy. However, the debt crisis in early 2012 in the euro zone, one of the biggest markets for Chinese goods, was beginning to act as a drag on China’s growth.

According to the latest census, the population of China reached 1.35 billion in 2012. National GDP was at RMB51.9 trillion, in which the primary, secondary and tertiary sectors attributed 10.1%, 45.3% and 44.6% of total GDP respectively.

— A5-3 — APPENDIX 5 MARKET CONSULTANT’S REPORT

China National GDP, 2002 - 2012

60 16%

14% 50 12% 40 10%

30 8%

6% 20 Real YoY GrowthReal YoY (%) GDP (RMB trillion) GDP (RMB 4% 10 2%

0 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 GDP Real YoY Growth

Source: National Bureau of Statistics of China, Economic Intelligence Unit

China’s real GDP growth fell from 14.2% in 2007, to 9.6% in 2008 and to 9.2% in 2009. The Chinese government implemented a large economic stimulus package and an expansive monetary policy, which boosted domestic investment and consumption and helped to prevent a sharp economic slowdown. Real GDP growth recovered to 10.4% and 9.3% for 2010 and 2011 respectively and China has been able to maintain healthy economic growth rates. In 2012, the real GDP growth rate was 7.8%. Growth has started to slow down as government officials impose domestic controls to stabilise growth, in order to slow down the pace and to be able to better address social and environmental issues. The government has concentrated more on raising the quality of economic growth, which is good for companies’ restructuring and industrial upgrading. Monetary and fiscal policies in China will further support investment in infrastructure, public housing and water resources projects. In the long run, the International Monetary Fund (IMF) projects that China’s real GDP will maintain at a level of 7.75% and 8.2% growth per annum in 2013 and 2014 respectively.

China’s urban residents saw their average per capita disposable income increase 12.6% YoY, representing 9.6% real growth in 2012 after being adjusted for inflation. The real growth was 1.2 percentage points more than that in 2011, bringing up average incomes to RMB24,565. Double digit growth was recorded for the past 10 years except for 2009, when the country suffered as a result of the European debt crisis.

In almost all regions of China, urban disposable income has grown faster than GDP, indicating that the Chinese population continues to reap the benefits of the country’s economic growth.

— A5-4 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Per Capita Disposable Income, 2002 - 2012

30,000 20% 18% 25,000 16% 14% 20,000 12% 15,000 10% 8% 10,000 6% 4% Per Capita Disposable Income (RMB) Per 5,000 2% 0 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Per Capita Disposable Income YoY Growth

Source: National Bureau of Statistics of China

Another point to note is that the Renminbi has soared against the US dollar in recent years. Appreciation of the Renminbi gives both advantages and disadvantages to foreign economic and trade development. Although there are some drawbacks of Renminbi appreciation such as rising costs for foreign companies to invest in China and the weakening of export products, Renminbi appreciation encourages the improvement of export structure and technological innovation, which encourages enterprises to rely more on technology progress and increase their added value, rather than having low prices to dominate the market. Secondly, it promotes economic growth in central and western regions as higher investment costs in coastal areas cause multinational corporations to start to turn to inland cities for development, where costs are generally lower. To help promote the central/western region, the infrastructural development in the inland area has improved accordingly.

China’s economic growth is attributed to two main factors: large-scale capital investment (financed by large domestic savings and foreign investment) and rapid productivity growth. These two factors appear to have gone together hand in hand and led to higher efficiency in the economy, which has boosted output and increased resources for additional investment in the economy.

1.3 Hong Kong’s Economic Integration with Mainland China

The Supplement IX to CEPA (Closer Economic Partnership Arrangement) signed on 29 June 2012 provides for a total of 43 services liberalisation and trade and investment facilitation measures, aiming to strengthen Hong Kong and the Mainland’s cooperation in areas of finance and trade and investment facilitation. It also plans to promote the mutual recognition of professional qualifications of Hong Kong and the Mainland. The measures have taken effect from 1 January 2013.

— A5-5 — APPENDIX 5 MARKET CONSULTANT’S REPORT

1.3.1 Hong Kong’s Entrepôt role for China Business

Hong Kong is so far the most important entrepôt of Mainland China. In 2012, the HKSAR government’s statistics showed that 62% of re-exports were of China origin and 54% were destined for Mainland China. According to statistics of China’s Customs, Hong Kong is the second largest trading partner of Mainland China after the US, accounting for 8.8% of its total trade in 2012.

1.3.2 Investment and Capital Integration

Hong Kong is the largest source of overseas direct investment in Mainland China. By the end of 2012, for all overseas-funded projects in Mainland, over 44% were tied to Hong Kong interests. Cumulative utilized capital income inflow from Hong Kong amounted to 46.3% of the national total, amounting to US$591.2 billion.

The leading investor in Hong Kong is Mainland China. In 2011, the stock of Hong Kong’s inward investment from the Mainland amounted to US$390 billion at market value, which was 36.3% of the total. Hong Kong acting as an entrance for investment in China is partly contributed by the rising visitor arrivals from Mainland China. This creates business opportunities, not only for retail sector, but also for the tourism and hotel industry.

1.3.3 Banking and Financial Integration

At the end of 2012 there were 10 licensed banks and three representative offices operating in Hong Kong that were incorporated in the Mainland. Large lenders include the Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China and China Construction Bank. Commercial banks with representative offices in Hong Kong include the Bank of Beijing and Ping An Bank.

The city is also where Chinese enterprises raise offshore capital. As of 2012, there were over 700 Mainland Chinese companies listed in Hong Kong with a total market capitalization of US$1.6 trillion, representing 57.4% of the market total. Since 1993, Mainland companies have raised more than US$400 billion via stock offerings in Hong Kong.

1.3.4 Renminbi’s Internationalization and Cross Border Yuan’s Business

The Pilot RMB Trade Settlement Scheme by the Central Government was introduced in July 2009 and since then there has been a fast expansion of offshore RMB services in Hong Kong. There has been an expansion in the offer of RMB-denominated financial products and services, including trade finance, RMB stocks, RMB bonds and RMB funds. Since the debut of the scheme till the end of 2012, related cross-border remittances totalled RMB4.9 trillion and RMB deposits in Hong Kong had reached RMB603 billion. In 2012, the issuance of RMB bonds in Hong Kong (Dim Sum Bonds) reached RMB112 billion. In April 2011, Hui Xian Real Estate Investment Trust was listed on the Hong Kong Stock Exchange, being the first RMB-denominated fund product and also the first RMB IPO outside the Mainland.

— A5-6 — APPENDIX 5 MARKET CONSULTANT’S REPORT

2. Hong Kong Tourism Market Overview

2.1 An Overview of Hong Kong as a Tourist Destination

Tourism is the major pillar of the economy of Hong Kong since it shifted to a service sector model in the late 1980s and early 90s. The Hong Kong Tourism Board (“HKTB”) is the statutory body set up to promote Hong Kong globally as a world-class tourist destination. It works closely with the Tourism Commission, travel trade partners and other partners directly and indirectly related to tourism to position Hong Kong as one of the world’s leading tourism destinations.

Since 2011, HKTB has adopted “Asia’s World City” as its global marketing theme. Promotions are launched in different source markets to highlight Hong Kong’s international and cosmopolitan setting, its unique cultural fusion, vibrant lifestyle and a variety of attractions, as well as its trend-setting image. Hong Kong is a global tourist destination and ranked 15th in the world in terms of travel and tourism competitiveness, according to the Travel and Tourism Competitiveness Index 2013 compiled by the World Economic Forum.

In 2012, visitor arrivals registered an increase of 16% over 2011 to 48.6 million, surpassing the 40 million mark for the second time. In the first four months of 2013, visitor arrivals increased by 13% over the same period of 2012 to 17 million. The Mainland continued to be the largest source market with 12.6 million arrivals in the first four months in 2013, representing a year-on-year (“YoY”) increase of 19.6% and accounting for 74.1% of total visitor arrivals.

The government continues to develop a wide range of diversified tourist attractions in Hong Kong with a view to enhancing Hong Kong’s overall attractiveness as a tourist destination. Top attractions include Ocean Park, Disneyland, and The Peak. Also, the government has put much initiative in organising world-class sports events, exhibitions and other events, such as The Hong Kong Rugby Sevens and Hong Kong Marathon, The Wine and Dine Festival and Hong Kong Winter Fest.

2.2 Visitor Arrivals

2.2.1 Total Visitor Arrivals

Visitor arrivals to Hong Kong reached an all-time high in 2012, at 48.6 million visitors, representing a YoY increase of 16%. Of these, 23.8 million (49%) stayed overnight, while the remaining 24.8 million (51%) left on the same day as they arrived. The appreciation of most major currencies against the Hong Kong dollar and the improvement of travel sentiment have partly contributed to the impressive performance.

— A5-7 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Hong Kong Total Visitor Arrivals, 2007 - 2012

60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

10,000,000

0 2007 2008 2009 2010 2011 2012

Overnight Visitors Same-day Visitors

Source: Hong Kong Tourism Board

2.2.2 Visitor Profile by Geographical Distribution

Hong Kong Visitor Profiles by Country/Territory of Residence, 2012

The Europe, Americas Africa & the Australia, NZ, 4% Middle East South Pacific 5% 1% North Asia 5% South and SE Asia 7%

Taiwan Mainland 4% China 72% Macau SAR/ Not identified 2%

Source: Hong Kong Tourism Board

Having a reputation and branding as Asia’s World City, continuous promotion of highlight attractions and easy accessibility by various modes of transport, Hong Kong is not only attractive to Mainland visitors but also to visitors from all around the world. Mainland China, Taiwan and Japan remained the top three sources of visitor arrivals. Non-Mainland China visitors contributed more than a quarter of the total tourist arrivals.

— A5-8 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Short-haul market regions like North Asia noted a yearly growth in arrivals of 1.2%, which is mainly due to the rising trend of South Korean arrivals. However, Taiwan and South & Southeast Asia recorded a marginal drop in 2012, when compared to 2011. In general, there was a 1% YoY slight drop in visitor arrivals from the short-haul market in 2012.

Arrivals from long-haul markets recorded a mild drop of 0.6% YoY in 2012. With the exception of Europe, Africa and the Middle East which recorded an increase of 1.5% YoY in visitor arrivals in 2012, other markets recorded slight decreases.

Emerging markets have registered a significant increase in arrival numbers. In particular, Russia continues its growth momentum since the agreement of visa-free visits in 2009. Russian tourist arrivals recorded another year of strong growth at 41.8% YoY in 2012.

The latest figures show a continuous growth of visitor arrivals. The cumulative visitor arrivals of January to April 2013 was 17 million, representing a YoY growth of 13%, which was mainly attributed to Mainland visitors, with a growth in visitor arrivals of 19.6% YoY.

2.2.2.1.Market Dominance of Mainland Chinese Visitors

Contributing to the majority of total visitor arrivals, the visitor growth from Mainland China was significant in 2012, with arrivals for the year reaching 34.9 million, which is 24.2% higher than that in 2011. Of these, 23.1 million travelled to Hong Kong under the Individual Visit Scheme (IVS), representing 66.3% of the total Mainland arrivals. The significant growth is attributable to increased cross-border traffic, which was facilitated by multiple-entry permits for Shenzhen residents and a favourable exchange rate for the Renminbi. The PRC and Hong Kong governments had introduced a series of measures to simplify the visitor arrival process. Hong Kong’s further integration with China will continue to increase cross-border traffic, fuelling continued growth in the number of visitors.

Composition of Visitor Arrivals, 2007 - 2012

2007 2008 2009 2010 2011 2012

Long-haul Markets 16.8% 15.4% 14.3% 13.0% 11.4% 9.8% Short-haul Markets 28.2% 27.5% 25.0% 24.0% 21.6% 18.4% Mainland China 55.0% 57.1% 60.7% 63.0% 67.0% 71.8%

Source: Hong Kong Tourism Board

— A5-9 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Mainland Chinese visitor arrivals have had an increasing importance in the contribution of the total visitor arrivals in the past five years. The proportion of Mainland Chinese visitors increased from 55% in 2007 to 72% in 2012.

The number of Mainland Chinese visitor arrivals was only 6.8 million in 2002, as compared to 34.9 million in 2012. This means that visitor arrivals have grown by more than four times in the last ten years. Such accumulating momentum has been driven by the implementation of various policies, such as the introduction of the IVS since July 2003, which currently covers 49 Mainland cities with around 270 million residents and the introduction of entry permits to Hong Kong for Hong Kong tours in September 2012.

Mainland China Visitor Arrivals, 2002 - 2012

40 50% 35 45% 40% 30 35% 25 30% 20 25% 15 20% 15% 10 10% 5 5% No. of Mainland Visitors (’million) 0 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Mainland Visitor Arrivals YoY Growth

Source: Hong Kong Tourism Board

The number of Mainland Chinese visitor arrivals has grown at more than 20% YoY since 2010. Looking ahead, as many cities in the Mainland China are still not included in the IVS together with the improvement of the transportation between Hong Kong and the Mainland China, it is expected the number of the Mainland China visitor arrivals to Hong Kong will continue to grow.

— A5-10 — APPENDIX 5 MARKET CONSULTANT’S REPORT

2.2.3 Overnight and Same-day Visitor Arrivals

The number of overnight and same-day visitor arrivals continuously rose between 2007 and 2012, reaching a Compound Annual Growth Rate (“CAGR”) of 6.7% and 17.7% respectively.

Overnight and Same-Day Visitor Arrivals, 2007 - 2012

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0 2007 2008 2009 2010 2011 2012

Overnight Visitors Same-day Visitors

Source: Hong Kong Tourism Board

2.2.4 Visitor Arrivals Forecast

With support from the Hong Kong government in boosting the tourism industry, the total number of visitor arrivals is expected to increase notably in the next few years. According to the Hong Kong Tourism Demand Forecasting System by the Hong Kong Polytechnic University, visitor arrivals from the majority of markets will see a positive and encouraging growth until 2020.

Of all the markets in the study, Mainland China is expected to have the most significant growth. It is expected that by 2020, the total number of visitor arrivals from Mainland China will be over 76 million. Comparing to the figure of 34.9 million in 2012, representing an expected increase of 119% in 8 years’ time.

— A5-11 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Forecast Mainland China Visitor Arrivals, 2012 - 2020E

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000 No. of Mainland Visitor Arrivals ('000) Visitor Arrivals No. of Mainland 10,000

0 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

Source: Hong Kong Tourism Demand Forecasting by The Hong Kong Polytechnic University

Actual Mainland Chinese visitor arrivals recorded 34.9 million in 2012, which is at a higher level when compared to the initial forecast for 2013.

With the outstanding performance for the Mainland Chinese visitor arrivals in the first four months of 2013, we expect that the actual number of Mainland visitor arrivals between 2013 and 2020 could exceed the expectation of the above forecasting study.

On the other hand, India and Korea markets are also expected to have significant growth in terms of visitor arrivals to Hong Kong. 0.9 million Indian and 2.1 million Korean visitors are expected to come to Hong Kong in 2020, representing increases of 125% and 96% in eight years.

Although the study does not cover every market, it appears that the trend of total tourism arrivals will go upward in the next few years. Expecting there will be further co-operation between Hong Kong and the Mainland government, together with the improvement of transportation links between Hong Kong and China, visitor arrivals are expected to continue to be dominated by Mainland Chinese visitors.

2.3 Purpose of visit

In terms of arrivals by purpose of visit, vacation visitors and business/meeting visitors account for the majority of arrivals, both for overnight visitors and same-day in-town visitors in recent years. The percentage of total vacation and business visitors account for 76% and 68% respectively for overnight and same-day visitors in 2012.

— A5-12 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Purpose of Visits of Overnight/Same-day Visitors, 2012

Visiting Business/ Friends/ Vacation Meetings Relative En-route Others

Overnight Visitors 60.4% 15.1% 18.0% 3.0% 3.6% Same-day Visitors 55.8% 11.9% 6.9% 18.9% 6.5%

Source: Hong Kong Tourism Board

Looking ahead, vacation and business visitors will continue to dominate visitor arrivals to Hong Kong.

2.3.1 MICE Market

Hong Kong is a premier Meetings, Incentives, Conferences, Exhibitions (“MICE”) destination, offering world-class convention and exhibition facilities and hundreds of events are held each year. Hong Kong’s main venues for MICE events are the AsiaWorld-Expo (AWE) near the airport, the Hong Kong Convention and Exhibition Centre (HKCEC) located in Wan Chai and the Kowloonbay International Trade and Exhibition Centre. Both the HKCEC and AWE have been listed in the top three “Best Convention and Exhibition Centre” in the CEI Asia Industry Awards 2012 organised by CEI Asia. In recent years, Hong Kong has also received awards such as the “Best Business City in the World” by the Business Traveler Asia-Pacific Travel Awards, and the “Best City for MICE Events”, also in the CEI Asia Industry Awards 2012. The MICE market attracts more visitors to Hong Kong and also benefits other parts of the tourism industry and Hong Kong’s economy. It is also beneficial to hotel operators located next to or near MICE facilities, such as those in Wan Chai or Causeway Bay which are located in close proximity to the HKCEC.

Overnight visitor arrivals for Meetings, Incentives, Conventions and Exhibitions remained relatively steady in 2012, registering a growth of 2.8% YoY. The largest source market is Mainland China, contributing 45.2% of total overnight MICE arrivals, growing 8.4% YoY. The Europe, Africa and the Middle East and South and Southeast Asia markets also recorded growth for overnight visitor arrivals for MICE in 2012.

Hong Kong’s strategic location close to the world’s fastest-growing economies and with a number of world-wide recognised professionals, allows it to regularly attract experts and businessmen from around the world. While over 50% of the world’s population is within five hours’ flying time of Hong Kong, visiting Hong Kong is also easy and comfortable. Therefore, many investors choose to set up exhibitions and meetings in Hong Kong in order to obtain a greater exposure to the global market. It is expected that the MICE arrivals will continue to provide strong support to visitor arrivals to Hong Kong, resulting in a strong demand for hotel rooms in the location with good transportation connections to these meeting and convention venues.

— A5-13 — APPENDIX 5 MARKET CONSULTANT’S REPORT

2.4 Average Length of Stay

Average Length of Stay (Nights) for All Markets, 2007 - 2012

3.7

3.6

3.5

3.4

Nights 3.3

3.2

3.1

3.0 2007 2008 2009 2010 2011 2012

Length of Stay (Nights)

Source: Hong Kong Tourism Board

The average length of stay for overnight tourists is 3.5 days in 2012. The figure has been relatively stable in the past few years. The increase in length of stay is expected to increase demand for hotel rooms. The HKTB has put a lot of resources into maintaining Hong Kong as a premier destination in Asia and to ensure that visitors from all around the world have enjoyable stays in Hong Kong.

2.5 Total Tourism Expenditure Associated to Inbound Tourism

Total Tourism Expenditure Associated to Inbound Tourism, 2006 - 2012

350 40%

300 35% 30% 250 25% 200 20% 150 15% 100 10% 50 5% 0 0% 2006 2007 2008 2009 2010 2011 2012

Total Tourism Expenditure (HK$ billion) YoY Growth

Source: Hong Kong Tourism Board

— A5-14 — APPENDIX 5 MARKET CONSULTANT’S REPORT

In 2012, the total tourism expenditure associated to inbound tourism amounted to HK$296.6 billion, a significant growth of 14.6% compared to a year ago. The two major components of tourism expenditure, destination consumption expenditure and the passenger international transportation expenditure, recorded a strong YoY growth of 15.4% and 11.2% respectively.

2.5.1 Overnight and Same-day Visitors Spending

Destination consumption expenditure is the sum of all payments made by visitors for goods and services consumed in Hong Kong, including accommodation, shopping, meals, entertainment and transport, but excluding the expenditure for cross-boundary transportation such as air ticket and ship fare. It is a measure of average spending of incoming visitors in Hong Kong.

Shopping continued to be the largest share of spending among overnight and same-day visitors. The overnight visitor spending and same-day visitor spending were HK$185.8 billion (+11.5% YoY) and HK$52.6 billion (+33.7% YoY) respectively in 2012. The growth has remained strong over the past five years.

Together with the growth of visitor arrivals, the per capita spending of both overnight and same-day visitors recorded strong growth. In 2012, the average per capita spending of overnight and same-day visitors was HK$7,818 (+4.7% YoY) and HK$2,121 (+5.4% YoY) respectively. Compared to the per capita spending of overnight visitors in 2007, the growth was more than 50%. Another notable aspect was the growth in per capita spending of same-day visitors. The growth reflects an increasing trend for same-day visitors to visit Hong Kong for vacation purposes, who tend to make brief stops in the city and spend before or after visiting Mainland China or other destinations.

It is also interesting to find out that the spending ability of Mainland Chinese visitors has increased significantly in recent years and with a higher spending power than other visitors. Many Mainland Chinese visitors have been visiting Hong Kong to satisfy their shopping needs. Hong Kong is an attractive shopping destination mainly because the goods are of relatively lower prices, have better quality assurance and there are a wider and more exclusive range of products being offered with better services when compared to the shopping experience in their hometown. They contributed significant spending in Hong Kong’s tourism and retail industries.

— A5-15 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Per Capita Spending of Overnight and Same-Day Visitors for All Markets and Mainland China Visitors, 2007 - 2012

9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000

Per Capita Spending (HK$) 1,000 0 2007 2008 2009 2010 2011 2012

Overnight Visitors (All Market) Same-day Visitors (All Market)

Overnight Visitors (Mainland China) Same-day Visitors (Mainland China)

Source: Hong Kong Tourism Board

The rise in income levels of Mainland Chinese has induced them to spend more during travelling. We expect that the trend of per capita spending is positive and the spending ability of Mainland Chinese visitor will further increase in view of the strong economic outlook in China.

2.5.2 Spending Pattern of Visitors

Hong Kong is well-known as a shopping destination. In 2012, both overnight and same-day visitors spent the most on shopping, accounting for 59.5% and 90.2% of their total spending in Hong Kong.

Overnight Visitors Spending Pattern, 2012

Entertainment Tours 3.1% 0.4%

Meals outside Others Hotels 5.5% 11.2%

Shopping 59.5%

Hotel Bills 20.3%

Source: Hong Kong Tourism Board

— A5-16 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Same-Day Visitors Spending Pattern, 2012

Meals Outside Others Hotels 5.8% 3.5% Hotel Bills 0.5%

Shopping 90.2%

Source: Hong Kong Tourism Board

2.6 Hong Kong’s Tourism Attractions

Hong Kong has a diverse range of tourist attractions catering to multiple segments including leisure visitors, business visitors, families and visitors of different age groups. According to the “Discover Hong Kong” website, the top attractions include the Peak, which provides a panoramic view of Hong Kong Island; the Avenue of Stars at Tsim Sha Tsui which offers a view of Victoria Harbour; the theme parks Ocean Park and Hong Kong Disneyland and the shopping destinations of the Ladies’ Market and Temple Street Night Market. Other popular places are the temples, heritage sites, natural landscapes and the numerous shopping districts and malls. Some upcoming tourism attractions are outlined below:

2.6.1 Hong Kong’s Theme Parks

Ocean Park is a marine-life theme park and amusement park situated in the Southern District of Hong Kong. It positioned itself as the world’s 12th most visited theme park by attendance. Originally opened in 1977, it has undergone several redevelopment projects in recent years, with new attractions including Aqua City and Thrill Mountain. In Hong Kong’s 2013-14 budget speech, the government announced that it will provide a HK$2.3 billion loan to Ocean Park to develop a new all-weather Water World. Also, the government plans to build three hotels to accommodate the visitors to the theme park.

Hong Kong Disneyland opened in 2005 and is located on Lantau Island. It has also undergone expansion in recent years with the opening of the first themed area, Toy Story Land in November 2011, Grizzly Gulch in 2012 and Mystic Point in 2013.

— A5-17 — APPENDIX 5 MARKET CONSULTANT’S REPORT

2.6.2 Annual Mega Events

A number of popular and established events are held in Hong Kong on an annual basis, such as the Rugby Sevens and the Hong Kong Marathon. To further promote Hong Kong as an events capital of Asia, the Government set up a HK$100 million ‘Mega Events Fund’ (MEF) in May 2009 for a tenure of three years to assist local non-profit-making organisations to host more attractive arts, cultural and sports events in Hong Kong. In Hong Kong’s 2012-13 Budget, the Financial Secretary proposed to allocate HK$150 million to the MEF and to extend its operation for a further five years.

Events that benefit from this fund in 2013 include the Dragon and Lion Dance Extravaganza, Hong Kong Well-wishing Festival, the Hong Kong Open Championship (Golf) and the hosting of Manchester United for a football match as part of their Asia tour against the local Hong Kong team Kitchee. Such events are likely to be beneficial to Hong Kong’s image and in attracting future events to the city.

2.7 Transportation Infrastructure Development

The government has continued to upgrade the transportation network and to create new tourism spots to attract visitors travelling to Hong Kong. Upon completion of the projects, it is expected that the number of visitors will increase more rapidly.

In 2012, 23.8% of visitor arrivals to Hong Kong were by air, 9.7% by sea and 66.5% by land.

2.7.1 Hong Kong International Airport and its Third Runway Development

In June 2011 the Hong Kong Airport Authority released the Hong Kong International Airport Master Plan 2030 to the public, a 20-year blueprint for the airport’s development. With the current aircraft handling facilities approaching their maximum capacities, the government will plan to develop a third runway to the north of Chek Lap Kok. The additional terminals, airfield and apron facilities will be built accordingly. Upon completion, it is estimated that HKIA would be able to accommodate 620,000 flight movements per year (the practical maximum capacity of a two-runway system is 420,000) and meet forecast annual passenger and cargo throughput of approximately 97 million and 8.9 million tonnes respectively by 2030. The entire project is expected to take about 11 years, with the third runway to be commissioned in 2023.

— A5-18 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Source: Hong Kong Airport Authority

2.7.2 Cross Border Railway Infrastructure Development

Hong Kong’s MTR Corporation and the Ministry of Railways of the People’s Republic of China jointly operate inter-city train services that cross the Hong Kong-China border. Currently, there are three through-train routes:

• Between Hong Kong and Beijing (Beijing-Kowloon Through Train)

• Between Hong Kong and Shanghai (Shanghai-Kowloon Through Train)

• Between Hong Kong and Guangzhou (Guangzhou-Kowloon Through Train)

2.7.2.1.Linkage with China’s National High-speed Railway Network

Currently taking 100 minutes, the journey time between Hong Kong and Guangzhou will be cut to 48 minutes with the opening of the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL). Now under construction, it is scheduled to be completed in 2015 and a new train station, West Kowloon Terminus, will be built in Hong Kong to be served by this railway. The XRL will be boosting the connectivity of Hong Kong as the southern gateway to the Mainland.

— A5-19 — APPENDIX 5 MARKET CONSULTANT’S REPORT

XRL Connections to Mainland National High Speed Railway Network

Source: MTRC

2.7.3 Hong Kong’s Mass Transit System Development

The city is well served by the extensive railway network with coverage including Hong Kong Island, Kowloon and the New Territories including Lantau Island. The ten lines of the Mass Transit Railway (“MTR”) include the East Rail, Kwun Tong, Tsuen Wan, Island, Tung Chung, Tsueng Kwan O, West Rail, Ma On Shan, the Airport Express and the Disneyland Resort Line.

Several projects are on-going to extend the MTR network and coverage in Hong Kong. These include:

• West Island Line: This is an extension of the MTR Island Line, as well as a community railway that runs beneath the densely populated areas of the Western District. The construction of this line began in 2009 and is expected to be completed in 2014.

— A5-20 — APPENDIX 5 MARKET CONSULTANT’S REPORT

• South Island Line (East): Construction of the South Island Line began in 2011 and is expected to be completed in 2015. Beginning from Admiralty, the line will connect the Southern District of Hong Kong Island, including stops at the theme park Ocean Park, Wong Chuk Hang, Lei Tung and South Horizons.

• Kwun Tong Line Extension (KTE): This will provide a means of transport to commuters in the Ho Man Tin, Hung Hom and Whampoa areas not yet served by rail services. Commencement of construction works began in 2011 with completion expected in 2015.

• Shatin to Central Link (SCL): This line will stretch from Tai Wai in the New Territories to Admiralty on Hong Kong Island and will connect several existing railway lines in multiple districts. Full completion of the line is expected in 2020.

2.7.4 Expressways’ Development

Hong Kong has a comprehensive road network for which is one of the most heavily utilised networks in the world, with over 640,000 vehicles on 2,090km of roads. There are nine roads that are classified as highways. Also, future highway developments include Tuen Mun Road (involving the reconstruction of a section of ageing Tuen Mun Road from Tsuen Wan to Sham Shing Hui), Central-Wan Chai Bypass and Island Eastern Corridor Link (a dual three-lane trunk road running along the northern shore of Hong Kong Island), Tuen Mun-Chek Lap Kok Link and the Tuen Mun Western Bypass (improvement of connection to Macau, Zhuhai and Shenzhen) and also Central Kowloon Route (better road network between east and west Kowloon). The future development of expressways is expected to shorten in-bound and out-bound travelling times.

2.7.5 Maritime Transport Development

2.7.5.1 Internal Routes

There are regular licensed passenger ferry services serving inner-Victoria Harbour, new towns and the outlying islands.

2.7.5.2 External Routes

The Hong Kong-Macau Ferry Terminal, located in Sheung Wan and the Hong Kong-China Ferry Terminal, located in Tsim Sha Tsui provide ferry services to Macau and cities in Southern China such as Zhuhai, Zhongshan and Shunde.

2.7.6 Other Major Infrastructure Development

2.7.6.1 Hong Kong-Zhuhai-Macao Bridge (HZMB)

This is a series of bridges and tunnels that will connect three of the major cities Hong Kong, Zhuhai and Macau in the Pearl River Delta. Travel times from Hong Kong to Macau or Zhuhai will be reduced from more than three hours to half an hour. Construction commenced in December 2009 and is expected to begin operation in 2016.

— A5-21 — APPENDIX 5 MARKET CONSULTANT’S REPORT

The proposed HZMB

Source: Highways Department

2.7.6.2 Kai Tak Cruise Terminal

Located at the site of the former Kai Tak Airport, the Kai Tak cruise terminal is currently under construction. The first berth has begun operations in June 2013, with the second berth to be ready in mid-2014. The development of the cruise terminal is to enable Hong Kong to become a regional transport hub for cruise liners, bringing the associated benefits of increased tourism. The Hong Kong government is working actively with the Hong Kong Tourism Board to promote cruise tourism and to collaborate with the travel trade and neighbouring ports on itinerary development and regional co-operation. The additional cruise facilities will help to enable Hong Kong to diversify its tourism product offering and attract more high-spending cruise trip visitors to Hong Kong. Being located close to Kowloon East, it will also facilitate development of another area of Hong Kong and is accessible to nearby developments.

— A5-22 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Outline Zoning Plan of Kai Tak Development Area

Source: CEDD

The above infrastructure developments will boost Hong Kong in attracting new visitors as well as alleviating current problems such as severe congestion on some routes and additionally providing an all-round better travel experience. The expansion of the airport will enable a larger throughput of passengers and additional capacity for airlines. Linkages with Mainland China will be boosted such as with the opening of the XRL and the Hong Kong-Zhuhai-Macao Bridge. Existing tourist attractions will benefit from the extension of the MTR network, in particular Ocean Park when the East section of the South Island Line is complete. Currently, the park is only accessible by road network. The increased accessibility alongside the new MTR stations will also open up new areas for development or redevelopment.

— A5-23 — APPENDIX 5 MARKET CONSULTANT’S REPORT

2.8 Hong Kong’s Position in Mainland China

The city is a key gateway for inbound tourists to Mainland China, while Mainland China is also the biggest source of inbound tourism for Hong Kong. In 2012, 71.8% of the total visitor arrivals to Hong Kong were from Mainland China.

Hong Kong is a regional transportation hub for connecting with cities in China due to its well-developed transportation network. This includes Hong Kong International Airport, extensive rail network, highways, expressways and ferry services. In addition, there are numerous events that attract visitors on a regional and global basis, including exhibitions, seminars and trade fairs which in particular attract MICE visitors.

Despite the moderation of growth in the Chinese economy, the outlook still remains cautiously optimistic for the Mainland Chinese tourism market of Hong Kong. Relaxations of the IVS scheme, the unique offerings of Hong Kong and other factors such as appreciation of Renminbi will continue to lure visitors from Mainland China. In 2012, the number of overnight tourist arrivals from Mainland China increased by over 24% YoY.

In addition, there have been a number of policy relaxations and changes in the market that facilitated visitors from Mainland China to come to Hong Kong:

• The IVS scheme allows residents from certain cities/provinces to visit Hong Kong as tourists in their personal capacity. First introduced in four cities in Guangdong Province (Dongguan, Zhongshan, Jiangmen and Foshan) in 2003, the coverage of the Scheme has expanded since implementation to now covering 49 Mainland cities.

• Travel endorsement for the IVS will be valid for three months or one year and for one or two visits, each with a seven-day stay.

• Residents of Shenzhen are able to apply for a multiple-entry permit that came into effect from 1 April 2009. Shenzhen non-hukou residents can also apply for IVS to Hong Kong starting from 15 December 2009.

• Non-permanent residents currently working or studying in tertiary institutions in Beijing, Tianjin, Shanghai, Chongqing, Guangzhou and Shenzhen can apply for their travel documents in these six designated cities, without returning to their home provinces from 1 September 2012 onwards. These residents can now apply for passport and entry permits for travelling to Hong Kong, Macau and Taiwan in the local Public Security Bureau.

• Temporary residents within nine cities in Guangdong Province are allowed to apply for entry permits to Hong Kong for Hong Kong Tours subject to a number of conditions. These include being employed by or transferred to government subsidiaries of temporary residence.

Hong Kong and the PRC Government maintain a close relationship, especially after the signing of CEPA. 277 local travel agencies have been approved to receive tour groups from Mainland China. These agents are all members of the Travel Industry Council of Hong Kong (TIC). Also, 979 travel agents were approved to organise outbound tours in Mainland China by the China National Tourism Administration. The increasing number of approved travel agencies facilitates more incoming Mainland tourists.

— A5-24 — APPENDIX 5 MARKET CONSULTANT’S REPORT

The transportation network has been improved. There are a total of 840 weekly flights between Hong Kong and Mainland China, while the number of train services between Kowloon and Guangzhou is 84 per week. Furthermore, ferry services between Hong Kong/Kowloon are operated to a number of ports in southern China.

2.9 Future Market Outlook

Hong Kong’s tourism industry has continued to perform well in recent years and the industry is established as a major pillar of the city’s economy. In 2012, visitor arrivals reached 48.6 million, growing by 16% YoY. For the period January to April 2013, a total of 17 million visitor arrivals were recorded, which is a growth of 13% over the same period of 2012, indicating a strong start for the year. Mainland China continues to be the largest source market for inbound tourism arrivals to Hong Kong, with its distinct and unique offerings for Mainland tourists as compared to their home market.

Growth rates in the number of arrivals may level out in the next few years. This is due to the slowing of the Chinese economy and stagnant economic growth in Europe and North America. Despite this, the tourism industry is likely to remain relatively robust with the strong fundamentals of the tourism industry. According to the Travel and Tourism Competitiveness Report 2013, Hong Kong is ranked 15th overall worldwide in the world in terms of travel and tourism competitiveness and 5th regionally in Asia Pacific. This is due to Hong Kong’s transport infrastructure being among the most developed in the world, being a safe and secure destination, having a conducive business environment with numerous international fairs and exhibitions being held and scoring high on cultural resources. The MICE market remains strong, with Hong Kong holding two world-class venues, namely AWE and HKCEC.

The HKSAR government has taken measures to alleviate some of the current problems in the tourism industry, while upgrading some of the existing attractions and creating new ones. To provide more hotel options to visitors, a number of sites in Hong Kong have been designated as “hotel only” sites. There are also initiatives to allow for the conversion of old buildings and for the re-vitalisation of heritage buildings into hotels. The theme parks Ocean Park and Hong Kong Disneyland are also being expanded and development of the cruise terminal at the site of the former airport at Kai Tak will help to develop Hong Kong into a regional cruise hub. In addition, the Mega Events Fund has been established to attract new or established high profile mega events to be held in Hong Kong. The Hong Kong and PRC governments are working towards creating greater synergies for tourism, such as joint manpower training and with the overseas promotion of multi-destination itineraries which include stops in both Hong Kong and Mainland China.

With its regional hub status, accessibility, unique positioning in relation to nearby destinations such as Macau and in Mainland China, Hong Kong is set to remain a key tourism destination both on a regional and worldwide basis. Although at a lower rate as compared to previous years, we anticipate that current levels of tourism arrivals will be sustained and grow over the next three to five years and that it will play a key role in the overall tourism market for Mainland China.

— A5-25 — APPENDIX 5 MARKET CONSULTANT’S REPORT

3. Hong Kong Hotel Market Overview

3.1 Existing Supply of Hotel Guestrooms

HKTB classifies hotels into High Tariff A, High Tariff B, Medium Tariff and unclassified. At the end of March 2013, there were 215 hotels in Hong Kong. In terms of number of rooms, 25% were classed as High Tariff A, 37% were classed as High Tariff B (the largest market share), 23% were classed as Medium Tariff, and the remaining 15% were unclassified, providing 68,303 rooms, 909 rooms more than a quarter ago.

Visitors from long-haul markets are more likely to stay in High Tariff Hotels which are also more welcomed by business travellers. Medium Tariff Hotels are more popular among individual tourists and tours group. These hotels are more economical and are also more popular for Mainland Chinese visitors.

For all hotels, the majority of hotel rooms are located in Kowloon Peninsula, amounting to 42% of the total hotel room stock in Hong Kong. Yau Tsim Mong District is the district where most of the hotel rooms are concentrated, followed by Wan Chai District and Central & Western District where many High Tariff Hotels are located. Most of the High Tariff A hotels are located near the Central Business District (“CBD”) area such as Central, Admiralty and Tsim Sha Tsui. High Tariff B and Medium Tariff Hotels are concentrated in districts having a good location near tourist attractions such as Yau Tsim Mong.

Location Distribution of Existing Hotel Rooms Supply in Hong Kong

Sai Kung 1.2% Sha Tin 4.6% Tsuen Wan Islands 5.6% 6.1% Tuen Mun 0.6% Yuen Long Yau Tsim Mong 1.6% 31.6% Kwai Tsing 4.0%

Central & Western 11.4% Sham Shui Po 0.1%

Kwun Tong Kowloon City Wan Chai 1.6% 9.0% 13.9% Eastern 6.8% Southern 1.8%

Source: Office of the Licencing Authority, Home Affairs Department; Colliers International (as at 30 April 2013)

— A5-26 — APPENDIX 5 MARKET CONSULTANT’S REPORT

The top three areas are in advantageous locations with excellent transportation networks. However, due to the upgrade and development of transportation and infrastructure networks, an increasing number of hotels are moving to non-traditional hotel districts, such as Island East, Kowloon East and Western District.

3.2 Future Supply of Hotel Guestrooms

With visitor arrivals hitting new highs and the promising outlook of the Hong Kong tourism industry, developers and investors are optimistic about the hotel market. In addition, the rising number of Mainland Chinese visitors and their increasing wealth are expected to remain strong support to Hong Kong’s hotel sector.

In March 2013, the tendering of the harbour-front hotel site of 57,792 sq.ft. in the former North Point Estate at the junction of Java Road and Tin Chiu Street for tender aroused public interest. On 27 March 2013, the tender was awarded to Sun Hung Kai Properties (“SHKP”) at HK$2.722 billion, which is within market expectations. SHKP forecasted that they will invest approximately HK$5.5 billion in this project. The result of land sales indicates that developers are still keen on securing hotel land into their land bank.

In terms of number of hotel rooms and revenue generated, the hotel industry has expanded rapidly over the past few years. According to HKTB, 58 hotels and 1 hotel extension project are scheduled for completion between 2013 and 2017, taking the total number of hotel rooms to 76,603 by 2017.

Hotels and Rooms Supply Forecast in Hong Kong, 2007 - 2017E

300 90,000

80,000 250 70,000

200 60,000

50,000 150 40,000 No. of Hotels 100 30,000 No. of Rooms

20,000 50 10,000

0 0 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

No. of Hotel No. of Rooms

Source: Hong Kong Tourism Board

The increase in the supply of hotel rooms is expected to slow down starting from 2014, after the boost in 2013. The average growth of hotel rooms was around 6% in the past five years.

— A5-27 — APPENDIX 5 MARKET CONSULTANT’S REPORT

However, the average growth is expected to drop to less than 2% in 2014-2017, based on the current schedule of completion of HKTB. There will be a strong imbalance as the growth rate of visitor arrivals is expected to be much greater than the growth of hotel rooms available. We believe that the unscheduled supply will come to the market after 2016. Therefore, the shortage of hotel rooms will be an essential factor boosting up the occupancy rate and average room rate.

Land suitable for hotel development is scarce in prestigious locations. Hotels in core locations such as Central, Tsim Sha Tsui and Wanchai/Causeway Bay face a limited number of new rooms supply in the future. On the other hand, development in traditional districts is often constrained by problems such as multiple ownership of sites and infrastructural capacity. Along with the improvement of infrastructure and in the transportation system, developers and investors are increasingly willing to put more resources in developing hotel projects in non-core districts to cope with the demand of tourists.

The Distribution of New Hotel Room Supply by District in Hong Kong

1,600

1,400

1,200

1,000

800

600

400

200

0 Yau Tsim Mong Wong Tai Sin Wan Chai Kwai Tsing Tsuen Wan

2013 2014 2015 2016 2017

Source: Hong Kong Tourism Board

Based on the latest hotel room supply schedule of HKTB, there will be a total of 8,300 rooms available in the coming five years. Of these, 3,656 rooms will be completed in 2013, with 42% of them in the Kowloon Peninsula and approximately 38% of them in New Territories. This might create some pressure on the occupancy rate in 2013. However, we believe that the problem will be cushioned by the continuous supply of Mainland Chinese visitors.

Although traditional districts like Yau Tsim Mong and Wanchai Districts will remain the top districts for hotel room supply in the coming three years, there is an increasing number of new hotels developments in emerging and decentralized locations such as Wong Tai Sin, Kwai Ching and Tsuen Wan District.

— A5-28 — APPENDIX 5 MARKET CONSULTANT’S REPORT

In view of the good hotel market sentiment, developers have tried to look for different ways to increase their hotel land bank. Other than the most direct method by construction at a hotel site, change of land use from existing industrial land to hotel use is also popular in districts such as Kwun Tong and San Po Kong, where the government has taken initiative to transform traditional industrial districts into commercial districts by rezoning designated areas into “Other Specified Uses (Business)” to facilitate hotel development. Revitalization of old heritage buildings is also possible for hotel development. An example is Tai O Heritage Hotel which is revitalized from the former Tai O Police Station.

Developers and investors are active in hotel development in consideration of the rapid increase of visitor arrivals. Hotel supply is expected to rise at a moderate pace. However, it may not be able to meet the increasing demand, especially for High Tariff B Hotels and Medium Tariff Hotels as they are currently more popular among Mainland visitors.

3.3 Trends of Performance of Hotels in Hong Kong

The supply of new hotels over the past few years has failed to keep pace with the rapid rising number of visitors, driving up hotel performance.

3.3.1 Occupancy Rate

3.3.1.1 Trend Analysis of Occupancy Rate

Hotel Occupancy Rate by Category in Hong Kong, 2006 - 2012

100%

95%

90%

85%

80%

75%

70% 2006 2007 2008 2009 2010 2011 2012

High Tariff A High Tariff B Medium Tariff All Hotels

Source: Hong Kong Tourism Board

The average occupancy rate for all hotels in 2012 was 89%, which is the same as the previous year. The average occupancy rate for High Tariff A and B hotels reached 85% and 91% respectively.

— A5-29 — APPENDIX 5 MARKET CONSULTANT’S REPORT

According to the latest statistics reflecting the occupancy rate of hotels in January to April of 2013, the average occupancy rate of High Tariff A and B Hotels were 84% and 88% respectively, representing three percentage points increase and two percentage points decrease YoY respectively. The occupancy rates appear to be relatively stable and there is no sign that occupancy rate of all hotels will have a significant change in 2013, provided that the economic situation remains stable.

3.3.1.2 Trend Forecast of Occupancy Rate

Occupancy rates are affected by the supply and demand of hotels. They are also affected by exogenous events which have a significant impact on tourism demand. Circumstances such as the global economic downturn, natural disasters and changes in government policies may have impact on overall hotel performance.

Affected by global economic uncertainty, visitor arrivals from long-haul markets such as Americas and European countries will remain stable or experience a slight decrease. However, the tourism market will still be supported by Mainland Chinese visitors, which is the majority of visitor arrivals for Hong Kong. The occupancy rate will grow in a moderate pace in the short term. By referencing to the historical relationship of supply and visitor arrivals records, the projection of occupancy rates for different hotel categories in 2013-2015 will be:

Projection of Occupancy Rates for 2013 - 2015

High Tariff A High Tariff B Medium Tariff All Hotels

2013-2015 80%-86% 87%-93% 88%-94% 85%-91%

Source: Colliers International

The projections of High Tariff B and Medium Tariff hotels appear to be relatively buoyant. We expect that both classes will outperform in the short run in light of the influx of Mainland Chinese visitor arrivals. Uncertainty in the global economy may also bring business visitors from High Tariff A Hotels to High Tariff B and Medium Tariff Hotels who may seek more economic accommodation options.

3.3.2 Average Room Rate

3.3.2.1 Trend Analysis of Average Room Rate

Average room rates of All Hotels have continued to rise since 2009 in view of the strong demand. The average room rate rose by 9.8% YoY for the overall hotel market in 2012. High Tariff A and B Hotels had a growth of 10.2% and 8.8% YoY respectively in 2012.

In the first four months of 2013, the average room rate for all hotels was HK$1,484, representing a YoY change of -1.3%.

— A5-30 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Hotel Average Room Rate by Category in Hong Kong, 2006 - 2012

3,000

2,500

2,000

1,500

1,000 Average Room Rate (HK$) 500

0 2006 2007 2008 2009 2010 2011 2012

High Tariff A High Tariff B Medium Tariff All Hotels

Source: Hong Kong Tourism Board

3.3.2.2 Trend Forecast of Average Room Rate

Similar to the occupancy rate, the average room rate is mainly affected by supply of hotel rooms and the demand of visitors. In either a rising or falling market, room rates are adjusted to maximize returns as demand rises or support occupancy as demand falls. Within the next 3 years, we believe that strong demand will provide a solid foundation for a further rise in room rates. The impact of the influx of Mainland visitors will continue to lead room rates to higher levels. The projection on average growth of room rates in the next three years is as follows:

Projection on Growth of Average Room Rate for 2013 - 2015

High Tariff A High Tariff B Medium Tariff All Hotels

2013-2015 2%-8% p.a. 3%-9% p.a. 4%-10% p.a. 3%-9% p.a.

Source: Colliers International

We expect that the room rates of all categories of hotel in 2013 will be at a similar level as 2012, and will pick up in 2014 and 2015, in the view that the global economy may start to recover leading to the increasing demand of hotel rooms.

Additionally, the growth in average room rates of High Tariff B and Medium Tariff hotels are expected to be higher as compared to High Tariff A hotels. High Tariff A hotels are expected to experience a slower growth compared to the other classes of hotels as they serve mostly westerner and business travellers who might be adversely affected by the continued difficulties in the global economy.

— A5-31 — APPENDIX 5 MARKET CONSULTANT’S REPORT

3.3.3 Revenue Per Available Room (“RevPAR”)

3.3.3.1 Trend Analysis of RevPAR

A comparison of RevPAR would be helpful to analyse the hotel performance by taking into account the effect of average room rates and occupancy rates of hotels. RevPAR of Overall, High Tariff A and High Tariff B hotels in 2012 have risen by 9.8%, 10.2% and 8.8% YoY respectively.

RevPAR by Category in Hong Kong, 2006 - 2012

2,500

2,000

1,500

1,000 RevPAR (HK$) 500

0 2006 2007 2008 2009 2010 2011 2012

High Tariff A High Tariff B Medium Tariff All Hotels

Source: Hong Kong Tourism Board, Colliers International

3.3.3.2 Trend Forecast of RevPAR

Since occupancy rates of all classes of hotels are already at high levels, we expect that the RevPAR will be largely affected by the room rate growth. In view of the positive hotel market sentiment, we expect that the RevPAR of all hotels will surpass the levels in 2012 resulting from a large demand of hotel rooms in the next three years. Based on the projection on occupancy rates and average room rates in the next 3 years, we expect the growth rate in RevPAR will be as follows:

Projection on Growth of RevPAR for 2013 - 2015

High Tariff A High Tariff B Medium Tariff All Hotels

2013-2015 2%-8% p.a. 3%-9% p.a. 4%-10% p.a. 3%-9% p.a.

Source: Colliers International

— A5-32 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Throughout the projections, we assume that the economic situation of Hong Kong will remain stable in the next few years. We have not taken into account the possibility of events that may lead to a sudden and direct impact on Hong Kong’s tourism such as financial shocks or natural disasters, as the level of impact of such events is uncertain. In addition, the above projections are a broad industry average and individual hotels may deviate from our forecast.

3.4 Demand for Efficient and Select Service Hotels

Efficient and select service hotels are increasingly popular in recent years in Hong Kong. With the economic downturn driven by the European Debt Crisis in 2009, and the continuous increment in room rates of luxury hotels in Hong Kong, corporations and business travellers have become more cost cautious when travelling. Other than reducing travelling necessity, they may also seek for alternatives, rather than staying in traditional luxury hotels for accommodation. Therefore, efficient and select service hotels would be a good option for them.

Targeting at business travellers or vacation travellers who do not plan to spend a lot of time staying in the hotel, efficient and select service hotels are usually located in convenient locations. Compared with traditional hotels, efficient and select service hotels are usually smaller, in terms of number of rooms and room size, and offer limited facilities and F&B outlets. On the other hand, due to the lower operating costs when compared to traditional hotels, the profit margins of efficient and select service hotels are usually higher.

Located in convenient locations and with small room counts, efficient and select service hotels have received good response in terms of occupancy and room rates. One of the examples is the Wanchai Regal iClub Hotel. With its close proximity to the HKCEC and located in Wan Chai, one of the business districts in Hong Kong, Wanchai Regal iClub Hotel enjoys strong demand for rooms from business visitors, traders and exhibitors. Over 90% of room demand at Wanchai Regal iClub Hotel came from business visitors in 2012. With the increasing business activities and the continuous growth in MICE market, it is expected that demand for efficient and select service hotels remains strong, especially for those located in core districts.

3.5 Market Outlook of Hong Kong’s Hotel Industry

With the benefit of the city’s thriving commercial infrastructure, solid economic and financial base, strategic position in Asia and strong connections with Mainland China, the overall performance of the hotel market is improving. The completion of various transport infrastructure projects providing further linkages between Hong Kong and Southern China will serve to increase Mainland Chinese visitor arrivals. Additionally, the integration of the PRC Government and Hong Kong Government and the steady appreciation of the Renminbi is also expected to attract more Mainland travellers. The average spending by Mainland visitors is also expected to rise as goods and services sold in Hong Kong dollars become relatively cheaper due to the continual appreciation of Renminbi.

— A5-33 — APPENDIX 5 MARKET CONSULTANT’S REPORT

The outlook for the overall hotel market remains positive in 2013. Despite visitor arrivals from long haul markets are relatively weak, the demand for hotel rooms will be supported by Mainland Chinese visitors. Therefore, High Tariff B and Medium Tariff hotels are expected to outperform as these types of hotels are more favourable to Mainland Chinese visitors. Weak performance in the financial sector will limit corporate travel budgets. However, the development of the MICE market in Hong Kong will also act as a strong support to the hotel industry. It will continue to attract business travellers, providing a strong support to Tariff A and B hotels, especially those in prime locations with excellent transportation linkages.

Overall, market sentiment for the hotel industry in Hong Kong is generally positive. Rising room rates and sustained growth in demand translates into a relatively stable yield for hotel properties. This sustained demand has led to a number of investors beginning to invest in hotel properties in recent years. However, limited sites available for development in core districts such as Central, Causeway Bay and Tsim Sha Tsui remains a challenge for developers. In view of this, investors are generally switching their focus to fringe areas or peripheral locations which are supported by attractions, popular shopping destinations and with an established infrastructure. Furthermore, the government has undertaken a number of initiatives to promote hotel development to meet the diversified needs of visitors. Therefore, we expect that there will be an increasing amount of hotel supply in non-core districts such as Eastern, Southern and Western Districts. Despite the continued global economic uncertainty, the hotel industry is expected to be well supported by Mainland visitors. Therefore, the Hong Kong hotel market is likely to remain relatively stable in 2013.

4. Individual Hotel Asset’s Analysis

The subject portfolio (the “Properties”) comprises two hotel developments in Sheung Wan and North Point. Despite these hotels are not situated in traditional hotel areas, they still benefit from an extensive transportation network and development plans by the Hong Kong government. They are well connected to tourist attractions, the CBD and core meeting venues in Hong Kong.

4.1 No. 132-134 Bonham Strand, Sheung Wan (“Property 1”)

4.1.1 The Location

Property 1 is located in Bonham Strand in Sheung Wan. Upon completion, it will be a 34-storey hotel development with a gross floor area of 7,197 sq.m. providing 248 guestrooms and suites. It will be a hotel up to the standard of Wanchai Regal iClub Hotel; which is a High Tariff B hotel with 99 guestrooms with interactive services and innovative facilities. The estimated date of completion of the whole construction is within 4th Quarter 2013.

— A5-34 — APPENDIX 5 MARKET CONSULTANT’S REPORT

4.1.2 Transportation Network

Located next to Central, the traditional CBD of Hong Kong, it benefits from extensive transport linkages to the rest of the territory. Property 1 is easily accessible by public transportation. Buses, public light buses, taxis are available along Queen’s Road Central. Sheung Wan MTR Station, currently the western terminus of Island Line, is 10-minute walking distance from Property 1. Also, Hong Kong Macau Ferry Terminal is 15-minute walking distance from Property 1. It provides ferry services to Macau and cities in Southern China such as Zhuhai and Shunde.

The anticipated MTR West Island Line is expected to improve the accessibility of Property 1. The link is expected to connect further to the western side of Hong Kong.

4.1.3 Neighbourhood Market

Sheung Wan comprises a mix of old and new commercial and residential developments. The immediate neighbourhood comprises high-rise commercial developments, mainly grade B offices, intermingled with small-scale residential buildings. With easy accessibility, the district is gradually transforming into a commercial node. It resulted from the shift of the CBD through the process of decentralisation. A number of reconstruction and conversion projects are on-going. Many of the old buildings are torn down and redeveloped into offices, ginza-type retail developments and hotels with good quality.

4.1.4 Competitors’ Analysis

With its close proximity to the CBD in Central, hotels in Sheung Wan face competition with hotels situated in areas which are within 10 minutes’ travelling time to Central, such as Admiralty, Wan Chai and Causeway Bay.

As the hotels in Central and Admiralty are mainly High Tariff A hotels which may not cause direct competition with Property 1, we are of the view that Property 1 may face competition with other efficient and select service hotels in Sheung Wan, Wan Chai and Causeway Bay.

Looking into Western District, in view of the good investment potential, Western District has successfully attracted hotel operators to set up business. For example Ibis, Shama and Dorsett Regency operate hotels in the district.

Due to the limitation of sizable development in Sheung Wan, a number of efficient and select service hotels have been built where they are well-furnished with small room size of around 150-250 sq.ft. Efficient and select service hotels are welcomed by business travellers as they are more economical and at the same time, providing a convenient and comfortable stay.

— A5-35 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Existing Hotel Guestroom Supply in the Western District of Hong Kong

Name No. of Rooms

338 Apartment 62 60 West Suites Hotel 60 99 Bonham 84 Best Western Hotel Harbour View 432 Butterfly on Hollywood 148 CHI Residence 50 Courtyard by Marriott Hong Kong 245 Domus Queen’s 44 Dorsett Regency Hotel, Hong Kong 209 Holiday Inn Express Hong Kong Soho 274 Hotel de Edge by Rhombus 90 Hotel LBP 46 Ibis Hong Kong Central & Sheung Wan 550 Island Pacific Hotel 344 Mia Casa Hotel 33 Ramada Hong Kong Hotel 307 Shama Central 56 Sohotel 37 The Henry 34 The Jervois 49 The Putman 28 Traders Hotel Hong Kong 281 3,463

Source: Office of the Licensing Authority, Home Affairs Department, as at April 2013

4.1.5 Future Supply of Hotel Guestroom in the Western District of Hong Kong

Because of its strategic location near the traditional CBD area, there is an increasing number of hotel developments to accommodate the needs of business visitors. Sheung Wan, with its mature transportation network, is well served by MTR, buses and other modes of public transportation. Future development of MTR favours the extensive developments in that area. Further, Hong Kong Macau Ferry Terminal also attracts Macau and Mainland visitors to stay in hotels in the district. The strategic location of Western District also allows quick access to the airport, other business districts such as Central, Admiralty and Tsim Sha Tsui as well as tourist attractions such as Soho and Western Market.

— A5-36 — APPENDIX 5 MARKET CONSULTANT’S REPORT

Future Hotel Development in Western District of Hong Kong

Schedule Completion Address No. of Rooms

2013 194-196 Queen’s Road Central 29 2013 No. 33-41 Des Voeux Road West 199 2013 No. 338 Queen’s Road West 214 2013 No. 23-25 Queen’s Road West & No. 30 Bonham Strand West, 54 Sheung Wan Total 496

Unscheduled completion No. 99-103A Connaught Road West No. 169-171 Wing Lok Street, No. 7 Bonham Strand West, Sheung Wan No. 361-365 Queen’s Road West No. 385-387 Queen’s Road West, Sai Ying Pun No. 11 & 13 Eastern Street No. 7-11 Jervois Street, Sheung Wan

Source: Hong Kong Tourism Board

Foreseeable supply in Western District is mainly small-scale hotel developments, with the majority of them providing less than 200 guestrooms and suites. As observed from the construction scale and the location of future developments, it is estimated that many of them will be positioned as Medium Tariff Hotels. In terms of hotel rooms, it is estimated that there will be 496 new hotel rooms available in the market by 2013 in Western District. Although it appears that there is a continuous supply of hotel rooms in the district, we believe that they will be absorbed quickly by business travellers and Mainland Chinese visitors.

4.2 No. 14-20 Merlin Street, North Point (“Property 2”)

4.2.1 The Location

Property 2 is located in Merlin Street in North Point. Similar to the hotel development type as Property 1, it will be a 32-storey hotel development with a gross floor area of 6,849 sq.m. providing a total of 338 guestrooms. The proposed hotel is scheduled to be completed in 2nd Quarter 2014.

— A5-37 — APPENDIX 5 MARKET CONSULTANT’S REPORT

4.2.2 Transportation Network

Located in North Point on Island East, it is easily accessible by means of MTR, buses, public light buses, trams and taxis along King’s Road. Property 2 is located close to Fortress Hill MTR Station which is 5-minute walking distance away.

Island Eastern Corridor is expected to provide quicker accessibility to Causeway Bay, Wanchai, Central and Western District through bypassing the major busy commercial areas on Hong Kong Island.

4.2.3 Neighbourhood Market

North Point is a rapidly developing commercial area. It is one of the earlier major districts for office decentralization. The major commercial buildings cluster around Quarry Bay, Tin Hau and Fortress Hill, where Property 2 is located at. The immediate neighbourhood comprises both office and commercial developments intermingled with hotel developments. Citicorp Centre, AIA Tower and Harbour Grand Hong Kong are located nearby.

4.2.4 Competitors’ Analysis

Being close to Causeway Bay to the west and Quarry Bay to the east which are clustered with retail and office developments, hotels in North Point face competition with hotels situated in these areas.

Looking into North Point, it is relatively more mature in terms of commercial development. Existing hotel developments in North Point are of a relatively large scale. Most of the hotels have more than 200 rooms. Some of them even provide five star facilities and services with superb views of Victoria Harbour.

Existing Hotel Guestroom Supply in North Point of Hong Kong

Name No. of Rooms

City Garden Hotel 615 Equinox Mercury 69 Harbour Grand Hong Kong 829 Harbour Plaza North Point 673 Ibis North Point 275 Newton Hotel Hong Kong 362 Newton Inn 297 Printemp Hotel Apartment 94 The South China Hotel 204 Twenty One Whitfield 54 Total 3,472

Source: Office of the Licensing Authority, Home Affairs Department, as at April 2013

— A5-38 — APPENDIX 5 MARKET CONSULTANT’S REPORT

4.2.5 Future Supply of Hotel Guestrooms in North Point

The mix of commercial and residential developments has made North Point a good location for tourists’ accommodation because of the good supporting facilities. Also, the proximity to Kowloon East also encourages more hotel developments in the Eastern District as it can provide quick access to the Kowloon East CBD2 and the future Kai Tak Development Area. In light of the limited existing supply in North Point, an increasing number of hotels will be constructed in the coming few years.

Future Hotel Development in North Point of Hong Kong, 2013 - 2017

Schedule Completion Address No. of Rooms

2013 No. 118-120 Electric Road, North Point 92 2013 No. 14-16 Tsing Fung Street, North Point 68 2014 No. 9-11 Wing Hing Street, North Point 36 2017 Oil Street, North Point 840 Total 1,036

Unscheduled completion No. 13 & 15 Mercury Street, North Point No. 8A-8B Wing Hing Street, North Point

Source: Hong Kong Tourism Board

The foreseeable supply in North Point is mainly medium scale hotel developments. As observed from the construction scale and the location of the future developments, it is estimated that they will be positioned as High Tariff Hotels. It is estimated that there will be a total of 1,036 new hotel rooms available in the market in North Point by 2017.

As the supply of hotel rooms in North Point is relatively stable, we believe that the new supply will be quickly absorbed, and will not create a negative effect to the hotel performance in the district.

4.3 Market Outlook for the Hotel Properties

Although the hotel market faces some uncertainty due to the uncertain global economic performance, we expect that Hong Kong’s tourism market will remain buoyant as there is a continuous flow of visitors from Mainland China. Therefore, the overall hotel market is expected to keep its momentum in the next few years.

— A5-39 — APPENDIX 5 MARKET CONSULTANT’S REPORT

In particular, High Tariff B hotels located in areas with good infrastructural facilities or concrete development plans from the government is expected to outperform in the coming years, as there is a shortage of affordable hotel rooms in prime locations. Further co-operations between Hong Kong and PRC governments may further add to the cross-border flow and lead to an even bigger demand for High Tariff B Hotels with reasonable quality and affordable price.

While the completion of the West Island Line is expected to improve the linkage to the western part of Hong Kong Island, more obvious improvements are expected to be realized for Property 1 after the completion of XRL and HZMB which are all located on the western side of the territory. On the other hand, the completion of Kai Tak Development Area is expected to bring more cruise and business visitors to stay in hotels in areas of Island East.

Although a number of hotels are scheduled to be completed in the next 5 years, we believe that there is no material negative impact to the Properties. As mentioned above, efficient and select service hotels have received good response in terms of both occupancies and average room rates in recent years, providing good prospects to the Properties.

5. Conclusion

Hong Kong’s tourism market is expected to remain stable and to continue to grow in the next few years, driven mainly by tourism arrivals from Mainland China. Strong economic growth in Mainland China is expected to continue its positive trend. While Hong Kong is a key gateway for inbound tourists to Mainland China, Mainland China is also the biggest source of inbound tourism for Hong Kong. Further collaboration with the PRC Government is expected and will continue to boost cross-border traffic, bringing additional growth of visitor numbers. Hong Kong is anticipated to remain a key tourism destination both on a regional and global basis with its regional hub status, accessibility and unique positioning. Its reputation and branding as Asia World City will continue to attract visitors from both east and west.

The hotel market sentiment in Hong Kong is positive. The rising demand for hotel rooms will translate into sustainable growth for the hotel industry, which has benefited from the city’s efficient transportation system, a solid economic and financial base and strong connections with Mainland China. Despite the continued global economic uncertainty, visitors from Mainland China will act as a strong backup to the hotel market. Therefore, the hotel market is expected to remain relatively stable in 2013. Additionally, demand for efficient and select service hotels is expected to be strong as they are also welcomed by business travellers.

Proposed future development in Sheung Wan and North Point Districts has initiated a number of hotel developments. Although a number of hotels are scheduled to be completed in these areas in the coming few years, we believe that there is no material negative impact to the Properties. Additionally, the good responses in terms of occupancies and average room rates for efficient and select service hotels in recent years is expected to provide good prospects for the Properties.

— A5-40 — APPENDIX 5 MARKET CONSULTANT’S REPORT

6. Limitations of this Market Consultant’s Report

6.1 Statement of Pecuniary Interest

We confirm that Colliers has no pecuniary or other interest in the market that would conflict with proper assessment or could reasonably be regarded as being capable of affecting our ability to give a fair and unbiased opinion. The position will be maintained until the purpose for which this Market Consultant’s Report is being obtained is completed.

6.2 Information Utilized

Our review is based on information developed from research of the markets, discussions with professionals in the hospitality industry in Hong Kong and knowledge of the industry, which is integral to the outcome of our conclusions and estimation. We have also obtained data and information for this assignment from a wide range of sources. Whilst due care has been undertaken in the application of the information, Colliers has no responsibility to warrant or represent that such information is accurate or correct. We also have no responsibility to update this Market Consultant’s Report for events and circumstances occurring after the date of issuance.

6.3 Limitations and Assumptions

This Market Consultant’s Report contains forward looking statements which state Colliers beliefs, expectations, forecasts or predictions for the future. Colliers stresses that all such forecasts and statements other than statements of historical facts outlined in this summary report should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making forecasts involves assumptions about a considerable number of variables which are very sensitive to changing conditions. Variations of any may significantly affect outcomes and Colliers draws your attention to this.

Colliers therefore can give no assurance that the forecasts outlined in this report will be achieved or that such forecasts and forward looking statements will prove to have been correct and you are cautioned not to place undue reliance on such statements. Colliers undertakes no obligation to publicly update or revise any forward looking statements contained in this report, whether as a result of new information, future events or otherwise, except as required by law and all forward looking statements contained in this summary report, are qualified by reference to this cautionary statement.

The major findings, conclusions and recommendations are further based on the following assumptions:

• There will be no political or administrative developments that will significantly impact general confidence in Hong Kong, to the detriment of business activity, tourist arrivals and domestic travel;

— A5-41 — APPENDIX 5 MARKET CONSULTANT’S REPORT

• Support infrastructure such as fresh water, sewage treatment, electricity and gas will be supplied / generated at a consistent and reliable level to maintain end-use satisfaction;

• The existing transportation system to, from and within Hong Kong will be maintained and the planned infrastructure will be in place according to its respective schedule;

• The global economy is assumed to maintain a steady growth across the forecast period; and

• There is no external shock such as financial crisis or natural disasters to affect the demand and supply of hotel development during the forecast period

Yours faithfully, For and on behalf of Colliers International (Hong Kong) Ltd.

David Faulkner Stella Ho BSc (Hons) FRICS FHKIS RPS(GP) MAE MSc BSSc (Hons) MRICS MHKIS RPS(GP) Executive Director Director Valuation & Advisory Services — Asia Valuation & Advisory Services

— A5-42 — APPENDIX 6 SUMMARY OF GOVERNMENT GRANTS

1. THE SHEUNG WAN HOTEL

The land on which the Sheung Wan Hotel is located is held from the Government as to (a) Section C of Marine Lot No.67A for the residue of the term of 999 years from the 7th day of February 1852 under a Government Lease dated the 26th day of February 1852 and made between the Queen Victoria of the one part and George Duddell of the other part and as to (b) Subsection 2 of Section B of Marine Lot No.67, The Remaining Portion of Section B of Marine Lot No.67, Section A of Subsection 1 of Section A of Marine Lot No.67, The Remaining Portion of Subsection 1 of Section A of Marine Lot No.67, Subsection 1 of Section C of Marine Lot No.67, The Remaining Portion of Section C of Marine Lot No.67, Section A of Subsection 1 of Section B of Marine Lot No.67 and The Remaining Portion of Subsection 1 of Section B of Marine Lot No.67 for the residue of the term of 999 years from the 7th day of February 1852 under a Government Lease dated the 26th day of February 1852 and made between the Queen Victoria of the one part and John Rice of the other part and as to (c) Section G of Inland Lot No.66 and The Remaining Portion of Inland Lot No.66 for the residue of the term of 999 years from the 26th day of March 1868 under a Government Lease dated the 17th day of October 1868 and made between the Queen Victoria of the one part and Tung Alook of the other part.

Under the said Government Leases, the lessee named therein and his executors, administrators and assigns shall not use, exercise or follow, in or upon the said Lots or any part thereof, the trade or business of a Brazier, Slaughterman, Soap-maker, Sugar-baker, Fellmonger, Melter of tallow, Oilman, Butcher, Distiller, Victualler or Tavern-keeper, Blacksmith, Nightman, Scavenger, or any other noisy, noisome or offensive trade or business whatever, without the previous licence of the Government.

The current registered owner of the said Lots, Tristan Limited, has obtained a licence to carry out the trade or business of sugar baker, oilman (excluding petrol filling station), butcher, victualler and tavern keeper (the “Trade or Business”). Under the Offensive Trade Licence dated 12 December 2011 issued by the District Lands Office, Hong Kong West & South (registered in the Land Registry by Memorial No.12022300500014), the Government has approved a licence to be granted to Tristan Limited (including where the context so admits or requires its successors and assigns) (collectively the “SW Owner”) to carry out the Trade or Business in or upon the said Lots, subject to certain conditions including the following:-

1. All necessary licences, permits, permissions and approvals shall be obtained and all necessary notices served on any person, at the SW Owner’s own expense, prior to the commencement of any of the Trade or Business.

2. If the said Lots are developed, redeveloped or used solely for the purpose of hotel(s), the SW Owner shall not, throughout the term of the said Government Leases, assign, mortgage, charge, underlet, grant licence to use or occupy, part with the possession of or otherwise dispose of the said Lots or any building thereon or any part thereof or any interest therein or enter into any agreement so to do except as a whole.

— A6-1 — APPENDIX 6 SUMMARY OF GOVERNMENT GRANTS

3. If part(s) of the said Lots or any building(s) erected thereon are developed, redeveloped or used for the purpose of hotel(s), the SW Owner:-

(i) shall delineate the hotel portion(s) including such accommodation and facilities for the operation of a hotel in a manner acceptable to the Director of Lands (the “Director”) and shall not alter the accepted delineation without his prior written approval; and

(ii) shall not, throughout the term of the said Government Leases, assign, mortgage, charge, underlet, grant licence to use or occupy, part with the possession of or otherwise dispose of the said hotel portion(s) or any building thereon or any part thereof or any interest therein or enter into any agreement so to do except as a whole.

4. Conditions 2 and 3(ii) above will not apply to :-

(i) granting of licence to occupy any hotel room(s) and to use or occupy any car parking space(s) for a term not exceeding 12 calendar months in the aggregate including any right of renewal; and

(ii) underletting or granting of licence to use or occupy any of the ancillary accommodation (as hereinafter defined) provided on the said Lots on condition that the lease or tenancy or licence complies with (inter alia) the following terms and conditions:-

(a) the term of the lease, tenancy or licence shall not exceed 10 years in the aggregate including any right of renewal;

(b) the rent payable shall not exceed a rack rent or the licence fee payable shall not exceed the prevailing market fee;

For the purposes of the said Licence, ancillary accommodation shall mean retail shops, restaurants, pubs, fast food shops, entertainment facilities, business centres, facilities for fitness, health and sports, function rooms, exhibition facilities, conference facilities and automatic teller machines.

5. In the event of any breach of or non-compliance with the terms and conditions contained in the said Licence affecting any unit(s) or part(s) of the building erected on the said Lots and upon failure of the SW Owner to rectify the same within such reasonable period as may be imposed by the Director, the Director shall have the right to terminate at his sole discretion the application of the said Licence to such unit(s) or part(s) that has been in breach.

— A6-2 — APPENDIX 6 SUMMARY OF GOVERNMENT GRANTS

2. THE NORTH POINT HOTEL

The land on which the North Point Hotel is located is held from the Government for the residue of the respective further terms of 75 years, 75 years, 75 years and 75 years all commencing from the 25th day of August 1994 under four several new Government Leases in respect of The Remaining Portion of Section P of Inland Lot No.2273, The Remaining Portion of Subsection 1 of Section P of Inland Lot No.2273, The Remaining Portion of Subsection 1 of Section H of Inland Lot No.2273 and The Remaining Portion of Section H of Inland Lot No.2273 respectively deemed to have been granted under and by virtue of the Government Leases Ordinance (Chapter 40 of the Laws of Hong Kong) upon the expiration of the initial term of 75 years created by the original Government Lease of Inland Lot No.2273 dated 2nd April 1925 made between the late King George V of the one part and The Asiatic Petroleum Company (South China) Limited of the other part.

Under the said Government Leases, the lessee named therein and its successors and assigns shall not use, exercise or follow, in or upon the said Lots or any part thereof, the trade or business of a Brazier, Slaughterman, Soap-maker, Sugar-baker, Fellmonger, Melter of tallow, Oilman, Butcher, Distiller, Victualler or Tavern-keeper, Blacksmith, Nightman, Scavenger, or any other noisy, noisome or offensive trade or business whatever, without the previous licence of the Government.

The current registered owner of the said Lots, Wise Decade Investments Limited, has obtained a licence to carry out the Trade or Business. Under the Offensive Trade Licence dated 20 July 2012 issued by the District Lands Office, Hong Kong East (registered in the Land Registry by Memorial No.12082101060027), the Government has approved a licence to be granted to Wise Decade Investments Limited (including where the context so admits or requires its successors and assigns) (collectively the “NP Owner”) to carry out the Trade or Business in or upon the said Lots, subject to certain conditions including the following:-

1. All necessary licences, permits, permissions and approvals shall be obtained and all necessary notices served on any person, at the NP Owner’s own expense, prior to the commencement of any of the Trade or Business.

2. If the said Lots are developed, redeveloped or used solely for the purpose of hotel(s), the NP Owner shall not, throughout the term of the said Government Leases, assign, mortgage, charge, underlet, grant licence to use or occupy, part with the possession of or otherwise dispose of the said Lots or any building thereon or any part thereof or any interest therein or enter into any agreement so to do except as a whole.

3. If part(s) of the said Lots or any building(s) erected thereon are developed, redeveloped or used for the purpose of hotel(s), the NP Owner:-

(i) shall delineate the hotel portion(s) including such accommodation and facilities for the operation of a hotel in a manner acceptable to the Director and shall not alter the accepted delineation without his prior written approval; and

— A6-3 — APPENDIX 6 SUMMARY OF GOVERNMENT GRANTS

4. Conditions 2 and 3(ii) above will not apply to :-

(i) granting of licence to occupy any hotel room(s) and to use or occupy any car parking space(s) for a term not exceeding 12 calendar months in the aggregate including any right of renewal; and

(a) the term of the lease, tenancy or licence shall not exceed 10 years in the aggregate including any right of renewal;

(b) the rent payable shall not exceed a rack rent or the licence fee payable shall not exceed the prevailing market fee;

5. In the event of any breach of or non-compliance with the terms and conditions contained in the said Licence affecting any unit(s) or part(s) of the building erected on the said Lots and upon failure of the NP Owner to rectify the same within such reasonable period as may be imposed by the Director, the Director shall have the right to terminate at his sole discretion the application of the said Licence to such unit(s) or part(s) that has been in breach.

— A6-4 — APPENDIX 7 DIFFERENCE IN TERMS BETWEEN THE OPTION AGREEMENT AND THE MOU

The following is a summary of the terms of the Option Agreement that differ from the corresponding terms in the non-binding MOU.

Non-binding MOU Option Agreement

Refundable The Refundable Cash Collateral is The Refundable Cash Collateral is a Cash Collateral equal to HK$800 million. refundable sum of HK$990 million (representing 60% of the Initial Exercise Price).

Calculation of The Refundable Cash Collateral will The interest rate of the Refundable interest rate accrue interest income for Regal REIT Cash Collateral shall be calculated at for the at the higher of: (a) 4.25% per annum, the higher of the following: (a) 4.25% Refundable which is the interest rate of the notes per annum, which is the interest rate Cash Collateral due 2017 issued by Regal Hotels for the notes due 2017 issued by Regal pursuant to its MTN programme; and Hotels pursuant to its medium term (b) the interest rate of the tranche of note programme; and (b) the weighted notes to be issued by Regal REIT average effective interest cost (taking pursuant to its MTN programme. into account the interest rate, issue price, placement fees and commissions) of the Notes issued to finance the payment of the Refundable Cash Collateral.

— A7-1 — APPENDIX 7 DIFFERENCE IN TERMS BETWEEN THE OPTION AGREEMENT AND THE MOU

Non-binding MOU Option Agreement

Option Fee The Option Fee of HK$10 million The Option Fee of HK$10 million shall only be refundable where: shall only be refundable if:

(a) the occupation permit for the (a) the occupation permit in respect North Point Hotel is not obtained of the North Point Hotel is not by the Long Stop Date; obtained by the Long Stop Date;

(b) the Manager is not satisfied with (b) the Manager or Trustee is not the due diligence in respect of satisfied with its due diligence in the North Point Hotel (for respect of the North Point Hotel; example, the North Point Hotel does not meet pre-agreed (c) the condition to the exercise of specifications); or the North Point Option have not been satisfied by the date (c) the Manager has exercised the specified in section 3.2.6 of the call option but completion of the Letter to the Unitholders in this acquisition of the North Point Circular (except where this is due Hotel does not occur due to the to the fault of Regal REIT); fault of P&R. (d) completion of the NP Transaction does not occur due to the fault of P&R;

(e) the NP Updated Appraised Value is greater than the Maximum NP Updated Appraised Value or lower than the Minimum NP Updated Value and that the Manager or Trustee decides not to seek additional approval of Unitholders for exercising the North Point Hotel Option; or

(f) the Option Agreement is terminated by the Trustee on the grounds that (i) P&R has committed a material breach of warranties; or (ii) the NP Target Company or the NP Property Company has committed a material breach of the negative covenants set out in the Option Agreement.

Upon completion of the NP Transaction, the Option Fee shall be applied against part of the Final Exercise Price.

— A7-2 — APPENDIX 7 DIFFERENCE IN TERMS BETWEEN THE OPTION AGREEMENT AND THE MOU

Non-binding MOU Option Agreement

Source of The entirety of the Refundable Cash It is expected that the Refundable funding Collateral is expected to be financed Cash Collateral will be financed by by using the net proceeds from the the net proceeds of issuances of the issuance of notes under the Regal March 2013 Notes and the May 2013 REIT MTN Programme. Notes.

Expiry of The call option will expire and Unless otherwise agreed between P&R Option terminate (unless otherwise mutually and the Trustee, the North Point Hotel Agreement agreed by the parties) if: Option will automatically expire if:

(a) the updated appraised value for (a) the NP Updated Appraised Value the North Point Hotel is greater is greater than the Maximum NP than HK$2,000 million or lower Updated Appraised Value (i.e. than HK$1,300 million; or HK$2,000 million) or lower than the Minimum NP Appraised Value (b) the occupation permit for the (i.e. HK$1,300 million); or North Point Hotel is not obtained by the Long Stop Date; or (b) the occupation permit for the North Point Hotel is not obtained (c) the North Point Hotel Option is by the Long Stop Date; or not exercised within the option period (i.e. the period (c) the exercise notice is not commencing from the date that delivered during the option the occupation permit for the exercise period as specified in North Point Hotel is granted (as section 3.2.6 of the Letter to the notified by P&R to the Trustee) Unitholders in this Circular; or and ending 30 days from such date). (d) the conditions to the exercise of the North Point Hotel Option have not been satisfied by the date specified in section 3.2.6 of the Letter to the Unitholders in this Circular.

— A7-3 — APPENDIX 8 GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT 1(t)

The Manager and the Directors, collectively and individually, accept full responsibility for the accuracy of the information given in this Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in this Circular misleading.

2. DISCLOSURE OF INTERESTS IN UNITS 1(g), 1(h), noteto1(p), noteto2(s), 2(t), 2(u) Interests Held by the Manager and the Directors and Chief Executive Officers of the Manager

The REIT Code requires that connected persons of the Regal REIT shall disclose their interests in Units. In addition, under the provisions of the Trust Deed, Part XV of the SFO is also deemed to be applicable, among other things, to the Manager, the Directors and the chief executive officers of the Manager.

The interests and short positions held by the Manager, Directors and chief executive officers of the Manager in the Units required to be recorded in the register kept by the Manager under Schedule 3 of the Trust Deed are set out below:

Long position in the Units:

As at the Latest Practicable Date Name of Director and the Number of Approximate Manager Nature of the interest Units held % of interest

Lo Yuk Sui(1) Interest in a controlled 2,434,282,102 74.73% corporation Regal Portfolio Management Beneficial owner 120,381,598 3.70% Limited(2)

Notes:

(1) The interests in 2,434,282,102 Units were the same parcel of Units held through Century City in which Mr. Lo held approximately 58.16% shareholding interest.

(2) Regal Portfolio Management Limited is the Manager.

Save as disclosed above, none of the Manager, Directors and chief executive officers of the Manager were interested (or deemed to be interested) in Units, or held any short position in Units.

— A8-1 — APPENDIX 8 GENERAL INFORMATION

Unitholdings of Holders of 5% or More Interests

The following persons have interests or short position in the Units required to be recorded in the register kept by the Manager under Schedule 3 of the Trust Deed:

Long position in the Units:

As at the Latest Practicable Date Number of Approximate Name of Unitholder Nature of the interest Units held % of interest

Century City(1) Interest in a controlled 2,434,282,102 74.73% corporation Century City BVI Holdings Interest in a controlled 2,434,282,102 74.73% Limited (“CCBVI”)(1 and 2) corporation Paliburg(3 and 4) Interest in a controlled 2,428,995,102 74.57% corporation Paliburg Development BVI Holdings Interest in a controlled 2,428,995,102 74.57% Limited (“PDBVI”)(3 and 5) corporation Regal Hotels(6 and 7) Interest in a controlled 2,428,262,739 74.55% corporation Regal International (BVI) Holdings Interest in a controlled 2,428,262,739 74.55% Limited (“RBVI”)(6 and 8) corporation Complete Success Investments Beneficial owner 1,817,012,072 55.78% Limited(9) Great Prestige Investments Beneficial owner 373,134,326 11.45% Limited(9)

Notes:

(1) The interests in 2,434,282,102 Units held by each of Century City and CCBVI were the same parcel of Units, which were directly held by wholly-owned subsidiaries of CCBVI, PDBVI and RBVI, respectively.

(2) CCBVI is a wholly-owned subsidiary of Century City and its interests in Units are deemed to be the same interests held by Century City.

(3) The interests in 2,428,995,102 Units held by each of Paliburg and PDBVI were the same parcel of Units, which were directly held by wholly-owned subsidiaries of PDBVI and RBVI, respectively.

(4) Paliburg is a listed subsidiary of Century City, which held approximately 62.17% shareholding interest in Paliburg as at the Latest Practicable Date, and Paliburg’s interests in Units are deemed to be the same interests held by Century City.

(5) PDBVI is a wholly-owned subsidiary of Paliburg and its interests in Units are deemed to be the same interests held by Paliburg.

— A8-2 — APPENDIX 8 GENERAL INFORMATION

(6) The interests in 2,428,262,739 Units held by each of Regal Hotels and RBVI were the same parcel of Units, which were directly held by wholly-owned subsidiaries of RBVI.

(7) Regal Hotels is a listed subsidiary of PDBVI, which held approximately 51.28% shareholding interest in Regal Hotels as at the Latest Practicable Date, and its interests in Units are deemed to be the same interests held by PDBVI.

(8) RBVI is a wholly-owned subsidiary of Regal Hotels and its interests in Units are deemed to be the same interests held by Regal Hotels.

(9) These companies are wholly-owned subsidiaries of RBVI and their respective direct interests in Units are deemed to be the same interests held by RBVI.

Save as disclosed above, the Manager is not aware of any connected persons of Regal REIT, including the Trustee and the Independent Property Valuer who were interested (or deemed to be interested) in Units as at the Latest Practicable Date.

Save as disclosed above, so far as is known to the Directors or chief executive officers of the Manager:

(i) none of the Directors and Unitholders with an interest in more than 5% of all Units in issue has an interest, direct or indirect in the Transaction Matters requiring Approval;

(ii) no person (other than a Director) is interested (or deemed to be interested) in Units, or holds any short position in Units which were required to be disclosed to the Manager and the Stock Exchange pursuant to Divisions 2, 3 and 4 of Part XV of the SFO;

(iii) none of the Manager, Directors or chief executives officers of the Manager had any interests or short positions in the Units or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Manager and the Stock Exchange pursuant to Divisions 7, 8 and 9 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO),

which the Trust Deed, subject to certain exceptions, deems to apply to the Directors and chief executive officers of the Manager, the Manager and each Unitholder and all persons claiming through or under them.

3. DIRECTORS’ INTERESTS IN ASSETS, CONTRACTS AND COMPETING BUSINESS

Save as disclosed in this Circular, as at the Latest Practicable Date:

(a) none of the Directors or proposed Directors had any direct or indirect interest in any assets 2(v) which have been, since the date that the latest published audited accounts of Regal REIT were prepared, acquired or disposed of by (or leased to) or are proposed to be acquired or disposed of by (or leased to) Regal REIT;

— A8-3 — APPENDIX 8 GENERAL INFORMATION

(b) none of the Directors or proposed Directors was materially interested in any contract or arrangement entered into by Regal REIT and subsisting at the date of this Circular which was significant in relation to Regal REIT’s business; and

(c) none of the Directors or proposed Directors or any of their Associates had interests in a 2(x) business which competes or is likely to compete, either directly or indirectly, with Regal REIT’s business.

4. STATEMENT IN RELATION TO FINANCIAL POSITION 1(m)

The Manager confirms that, as at the Latest Practicable Date, there had not been any material adverse change in the financial or trading position of Regal REIT since the date that the latest published audited accounts of Regal REIT were prepared.

5. WORKING CAPITAL

Taking into consideration the financial resources available to Regal REIT, including its internally generated funds and available financing facilities, the Manager believes that Regal REIT has sufficient liquid assets to meet its working capital and operating requirements for the 12 month period commencing from the date of this Circular. To the extent that Regal REIT makes any acquisitions, it may be required to rely on external borrowings and/or equity or debt securities offerings to finance such acquisitions. The issue of additional equity or equity-linked securities may result in dilution to Unitholders.

6. INDEBTEDNESS

6.1 Indebtedness of the Regal REIT Group

At the close of business on 31 May 2013, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Circular, the Regal REIT Group had total borrowings of approximately HK$6,770.6 million, of which (i) bank borrowings of approximately HK$4,831.0 million were secured by the Regal REIT Group’s investment properties, property, plant and equipment and shares of certain subsidiaries of the Regal REIT Group; and (ii) other borrowings of approximately HK$1,939.6 million were unsecured.

Save as disclosed above and apart from the intra-group liabilities, the Regal REIT Group did not have any loan capital issued and outstanding, nor had the Regal REIT Group agreed to issue any loan capital, bank overdrafts and liabilities under acceptances (other than normal trade bills) or other similar indebtedness, debentures, mortgages, charges or loans or acceptance credits or hire purchase commitments, guarantees or other material contingent liabilities, in each case as at the close of business on 31 May 2013.

6.2 Indebtedness of the SW Target Group and the NP Target Group

At the close of business on 31 May 2013, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Circular, the SW Target Group had bank borrowing of HK$226.0 million, which was secured by the SW Target Group’s property under construction.

— A8-4 — APPENDIX 8 GENERAL INFORMATION

Save as disclosed above and apart from the intra-group liabilities, the SW Target Group did not have any loan capital issued and outstanding, nor had the SW Target Group agreed to issue any loan capital, bank overdrafts and liabilities under acceptances (other than normal trade bills) or other similar indebtedness, debentures, mortgages, charges or loans or acceptance credits or hire purchase commitments, guarantees or other material contingent liabilities, in each case as at the close of business on 31 May 2013.

At the close of business on 31 May 2013, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Circular, the NP Target Group had interest bearing total borrowings of HK$260.64 million, which was secured by the NP Target Group’s property under construction.

Save as disclosed above and apart from the intra-group liabilities, the NP Target Group did not have any loan capital issued and outstanding, nor had the NP Target Group agreed to issue any loan capital, bank overdrafts and liabilities under acceptances (other than normal trade bills) or other similar indebtedness, debentures, mortgages, charges or loans or acceptance credits or hire purchase commitments, guarantees or other material contingent liabilities, in each case as at the close of business on 31 May 2013.

7. EXPERTS AND CONSENTS 2(z)(i) 2(z)(ii)

Each of the Independent Financial Adviser, the Independent Property Valuer, the Market Consultant and the Reporting Accountant has given and has not withdrawn its written consent to the inclusion of its name in this Circular. Each of the parties above where relevant has also given their consent to the inclusion of its name in this Circular and/or its Appendices and all references thereto, in the form and context in which they are included in this Circular.

The following are the qualifications of the experts who have been named in this Circular or have given opinion or advice which are contained in this Circular.

Somerley Limited A licensed corporation under the SFO licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities

Savills Valuation and Professional Chartered Surveyors and Valuer Services Limited

Colliers International (Hong Kong) Market Consultant Limited

Ernst & Young Certified Public Accountants

As at the Latest Practicable Date, none of the experts had any interest in Regal REIT or the right 1(r) (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in Regal REIT.

— A8-5 — APPENDIX 8 GENERAL INFORMATION

As at the Latest Practicable Date, none of the experts had any direct or indirect interest in any 2(v) assets which have been, since the date to which the latest published audited accounts of Regal REIT were prepared (being 31 December 2012), acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to Regal REIT.

8. LITIGATION 2(y)

As at the Latest Practicable Date, none of Regal REIT, the Manager, the Trustee (in its capacity as the trustee of Regal REIT), the Regal REIT Group, the SW Target Group or the NP Target Group was involved in any litigation or claims of material importance and no litigation or claims of material importance, by or against Regal REIT, the Manager, the Trustee, the Regal REIT Group, the SW Target Group or the NP Target Group was pending or threatened.

9. MATERIAL CONTRACTS

Save as disclosed in Regal REIT’s previous announcements on the Stock Exchange, and save for the documents referred to in paragraphs 10(a) to 10(c) below, Regal REIT has not entered into any other material contracts (not being contracts entered into in the ordinary course of business) within the two years immediately preceding the date in this Circular. Please refer to sections 3.1 and 3.2 of the Letter to the Unitholders headed “Key Documentation — Share Purchase Agreement” and “Key Documentation — Option Agreement” respectively in this Circular for further details.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at no charge during normal business hours at the offices of the Manager from 9:00 a.m. to 5:00 p.m. on Business Days, from the date of this Circular, up to and including the date of the EGM:

(a) Share Purchase Agreement (together with the agreed forms of the New Lease Agreement, the New Lease Guarantee (with the agreed form of the New Hotel Management Agreement attached thereto), the assignment of the SW Shareholder Loan, the Deed of Tax Indemnity and the Interior Fit-Out Agency Deed in respect of the Sheung Wan Hotel attached thereto);

(b) Option Agreement (together with the agreed forms of the New Lease Agreement, the New Lease Guarantee (with the agreed form of the New Hotel Management Agreement attached thereto), the assignment of the NP Shareholder Loan, the Deed of Tax Indemnity and the Interior Fit-Out Agency Deed in respect of the North Point Hotel attached thereto);

— A8-6 — APPENDIX 8 GENERAL INFORMATION

(d) the annual reports of Regal REIT for the 3 years ended 31 December 2012 referred to in Appendix 1 headed “Financial Information of Regal REIT” to this Circular;

(e) the Accountants’ Reports in respect of the SW Target Company and the NP Target Company as set out in Appendix 2 to the Circular;

(f) the unaudited pro forma financial information of the Enlarged Group disclosed under Appendix 3 to this Circular;

(g) the Letter from the Independent Board Committee;

(h) the Letter from the Independent Financial Adviser;

(i) the Independent Property Valuer’s Valuation Reports as set out in Appendix 4 to this Circular;

(j) the Market Consultant’s Report as set out in Appendix 5 to this Circular;

(k) the written consents referred to in the section headed “Experts and Consents” of Appendix 8 to this Circular; and

(l) the MOU Announcements.

The Trust Deed will also be available for inspection at the registered office of the Manager for so long as Regal REIT continues to be in existence.

— A8-7 — NOTICE OF EXTRAORDINARY GENERAL MEETING 1(j)

Managed by

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an EXTRAORDINARY GENERAL MEETING of the Unitholders (the “Unitholders”) of Regal Real Estate Investment Trust (“Regal REIT”) will be held at Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong on Thursday, 18 July 2013 at 11:00 a.m. (“EGM”) for the purpose of considering and, if thought fit, passing, with or without amendments, the resolutions below.

Words and expressions that are not expressly defined in this notice of extraordinary general meeting shall bear the same meaning as that defined in the unitholder circular of Regal REIT dated 29 June 2013 (the “Circular”).

ORDINARY RESOLUTIONS

1. “THAT subject to Resolution 3. and Resolution 4. below being approved, approval (which, where relevant, shall include approval by way of ratification) be and is hereby given for:

(a) the consummation by Regal REIT of the transactions contemplated under the Share Purchase Agreement and other transactions contemplated under, associated with and/or related to the SW Transaction including but not limited to the execution of and consummation of the transactions under the Deed of Tax Indemnity and the Interior Fit-Out Agency Deed in respect of the Sheung Wan Hotel, as more fully described in the Circular; and

(b) authorisation be granted to the Manager, any director of the Manager and the Trustee to complete and to do all such acts and things (including executing all such documents as may be required) as the Manager, such director of the Manager or, as the case may be, such duly authorised signatory of the Trustee may consider expedient or necessary or in the interest of Regal REIT to give effect to all matters in relation to the SW Transaction generally.”

— N-1 — NOTICE OF EXTRAORDINARY GENERAL MEETING

2. “THAT subject to Resolution 3. and Resolution 4. below being approved, approval (which, where relevant, shall include approval by way of ratification) be and is hereby given for:

(a) the consummation by Regal REIT of the transactions contemplated under the Option Agreement and other transactions contemplated under, associated with and/or related to the NP Transaction, including but not limited to the exercise of the North Point Hotel Option, as well as the execution of and consummation of the transactions under the Deed of Tax Indemnity and the Interior Fit-Out Agency Deed in respect of the North Point Hotel, as more fully described in the Circular; and

3. “THAT subject to either or both of Resolution 1. and Resolution 2. above being approved, approval (which, where relevant, shall include approval by way of ratification) be and is hereby given for:

(a) the consummation by Regal REIT of the transactions contemplated under the Facility Letter and other transactions contemplated under, associated with and/or related to the Vendor Facility, as more fully described in the Circular; and

4. “THAT subject to either or both of Resolution 1. and Resolution 2. above being approved, approval (which, where relevant, shall include approval by way of ratification) be and is hereby given for:

(a) the New CCT Waiver Application and the agreements pertaining thereto (being the New Lease Agreements, New Lease Guarantees and New Hotel Management Agreements); and

— N-2 — NOTICE OF EXTRAORDINARY GENERAL MEETING

By order of the Board Regal Portfolio Management Limited as manager of Regal Real Estate Investment Trust Francis CHIU Director Hong Kong, 29 June 2013

Registered Office:

Unit No. 1504, 15th Floor 68 Yee Wo Street Causeway Bay Hong Kong

Notes:

1. A Unitholder entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint one or more proxies to attend and, on a poll, vote in his/her stead. The person appointed to act as a proxy need not be a Unitholder.

2. In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof, must be deposited at the Unit Registrar of Regal REIT, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time fixed for holding the Extraordinary General Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person should you so wish. In the event that you attend the meeting or adjourned meeting (as the case may be) after having lodged a form of proxy, the form of proxy will be deemed to have been revoked.

3. Where there are joint registered Unitholders of a Unit, any one of such Unitholders may vote at the meeting either personally or by proxy in respect of such Unit as if he/she were solely entitled thereto, but if more than one of such Unitholders is present at the meeting personally or by proxy, that one of such Unitholders so present whose name stands first on the Register of Unitholders of Regal REIT (the “Register of Unitholders”) in respect of such Unit shall alone be entitled to vote in respect thereof.

4. The Register of Unitholders will be closed from 16 July 2013 to 18 July 2013, both days inclusive, during which period no transfers of Units will be effected. In order to qualify to attend and vote at the Extraordinary General Meeting, all Unit certificates accompanied by the duly completed transfer documents must be lodged with the Unit Registrar not later than 4:30 p.m. on 15 July 2013.

As at the date of this notice, the Board comprises Mr. LO Yuk Sui as Chairman and Non-executive Director; Mr. Francis CHIU and Mr. Simon LAM Man Lim as Executive Directors; Mr. Donald FAN Tung, Mr. Jimmy LO Chun To, Miss LO Po Man and Mr. Kenneth NG Kwai Kai as Non-executive Directors; and Mr. John William CRAWFORD, JP, Mr. Alvin Leslie LAM Kwing Wai, Mr. Kai Ole RINGENSON and Hon. Abraham SHEK Lai Him, SBS, JP as Independent Non-executive Directors.

— N-3 —