Royal Host Real Estate Investment Trust

Royal Host Real Estate Investment Trust

September 29, 2005 15:51 ET

Royal Host REIT Announces $50 Million Convertible Debenture Issue

CALGARY, ALBERTA--(CCNMatthews - Sept. 29, 2005) - Royal Host REIT (TSX:RYL.UN) ("Royal Host" or the "Trust") today announced that it has entered into an agreement to sell to a syndicate of underwriters led by National Bank Financial Inc. and BMO Nesbitt Burns Inc., on a bought deal basis, $50,000,000 principal amount of Convertible Unsecured Subordinated Debentures (the "Debentures") with a coupon rate of 6.00% per annum payable semi-annually on October 31 and April 30 commencing on April 30, 2006. The Debentures will mature on October 31, 2015 (the "Maturity Date"). The net proceeds to Royal Host from the offering will be used as to approximately $28 million to reduce outstanding indebtedness on income producing properties and the balance to reduce other indebtedness, upgrade and reposition its existing hotel properties, for working capital and general Trust purposes, including future acquisitions of hotel properties. The offering is expected to close on or about October 20, 2005 and is subject to regulatory approval.

The Debentures will be convertible at the holder's option into Trust Units at the earlier of any time prior to the Maturity Date and the business day immediately preceding the date fixed by the Trust for redemption at a conversion price of $6.85 per Trust unit (the "Conversion Price"). The Debentures will not be redeemable prior to October 31, 2009. On or after October 31, 2009 but prior to October 31, 2011 the Debentures may be redeemed in whole or in part from time to time at Royal Host's option on at least 30 days' and not more than 60 days' notice at a redemption price equal to par plus accrued and unpaid interest, provided that the weighted average trading price of the Units on the TSX for the 20 consecutive trading days ending five trading days preceding the date on which notice of redemption is given exceeds 125% of the Conversion Price. On and after October 31, 2011, the Debentures may be redeemed in whole or in part from time to time at Royal Host's option at a price equal to their principal amount plus accrued interest. On at least 30 days' and not more than 60 days' notice, subject to regulatory approval, Royal Host REIT may satisfy its obligation to repay the principal amount of the Debentures on redemption or at maturity, in whole or in part, by delivering that number of Trust units equal to the amount due divided by 95% of the market price for the units at that time, plus accrued interest in cash.

About Royal Host REIT

Royal Host owns 37 hotels, manages 117 properties and franchises 120 locations representing 18,000 guestrooms in the mid-market to upscale segments. Royal Host owns the master franchise rights for the Travelodge brand in Canada and provides hotel and resort management services for its portfolio and to third party properties.

Royal Host is committed to creating stable and repeatable earnings through high quality assets, efficient operations and exceptional people. Through strategic management and growth of its assets, and ongoing training, communication and teamwork, it is committed to achieving ongoing improvements to its bottom line results. Royal Host Units and Convertible Debentures are traded on the Toronto Stock Exchange under the trading symbols "RYL.UN", "RYL.DB" and "RYL.DB.A", respectively.

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