Century City International (0355), Paliburg (0617), and Regal Hotels International (0078) jointly announced on Monday that the subsidiary Regal REIT (1881) will sell Regal Oriental Hotel in Kowloon City to Blue Sky Properties, with gross proceeds and net proceeds at HK$1.51 billion and HK$1.49 billion, respectively.
Blue Sky Properties, indirectly wholly-owned by Centaline Strategic Investments, plans to convert the Regal Oriental Hotel into a student hostel, and it will prepare and submit applications to relevant government authorities, according to an exchange filing.
Regal Hotels, Paliburg, and Century City, held by Lo Yuk-sui, the second son of Great Eagle (0041) founder Lo Ying-shek, and their respective subsidiaries, are estimated to record an accounting gain before tax and non-controlling interests of approximately HK$800 million, HK$600 million, and HK$600 million, respectively.
The proceeds are intended to be used as partial repayment of the existing facilities, to finance asset enhancement initiatives, and for general working capital purposes of the Regal REIT.
Following completion, Regal REIT will cease to have any interest in Regal Oriental Hotel, but will retain its interest in the excluded property - certain floor areas of Po Sing Court near the hotel, which will be transferred and assigned to another subsidiary or fellow subsidiary of the vendor before completion and continue to be leased to the existing lessee under a new tenancy agreement.
