Royal Host Real Estate Investment Trust
TSX : RYL.DB.A
TSX : RYL.UN
TSX : RYL.DB.B
TSX : RYL.DB.C

Royal Host Real Estate Investment Trust

June 05, 2007 15:04 ET

Royal Host REIT Announces $60 Million Convertible Debenture Issue

CALGARY, ALBERTA--(Marketwire - June 5, 2007) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES

Royal Host REIT (TSX:RYL.UN)(TSX:RYL.DB.A)(TSX:RYL.DB.B)(TSX:RYL.DB.C) ("Royal Host" or the "Trust") today announced that it has entered into an agreement to sell to a syndicate of underwriters co-led by National Bank Financial Inc. and CIBC World Markets Inc., on a bought deal basis, $60,000,000 principal amount of Convertible Unsecured Subordinated Debentures (the "Debentures") with a coupon rate of 5.90% per annum payable semi-annually on June 30 and December 31 commencing on December 31, 2007. The Debentures will mature on June 30, 2014 (the "Maturity Date"). Royal Host intends to use the net proceeds from the Offering to reduce outstanding indebtedness on income producing properties, to upgrade and reposition its existing hotel properties, for future acquisitions of hotel properties and for general Trust purposes. The offering is expected to close on or about June 26, 2007 and is subject to regulatory approval.

Each $1,000 principal amount of the Debentures will be convertible at the holder's option into 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 $8.90 per Unit (the "Conversion Price"). The Debentures will not be redeemable on or before June 30, 2010. After June 30, 2010 and prior to June 30, 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 or after June 30, 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 and unpaid interest. On at least 30 days and not more than 60 days' notice, subject to regulatory approval, Royal Host 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 Units equal to the amount due divided by 95% of the market price for the Units at that time.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

About Royal Host REIT

Royal Host's core businesses are hotel ownership, management and franchising. Royal Host owns 37 hotels, comprising 4,500 rooms, manages additional properties for third parties, and franchises over 100 locations (including 15 owned by Royal Host) under the Travelodge® and Thriftlodge® banners.

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.A", "RYL.DB.B" and "RYL.DB.C" respectively.

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