UPDATE 1-Cheung Kong proposes separate listing for hotels arm

* Cheung Kong/Hutchison to hold under 30 pct of hotel trust

* IPO cash for buying hotels from Cheung Kong/Hutchison

(Adds details)

HONG KONG, Oct 11 (Reuters) - Property firm Cheung Kong (Holdings) Ltd , owned by billionaire Li Ka-shing's family, plans to separately list its hotel business by way of an investment trust to free up capital for new investments, while realising the value of the hotels.

The trustee-manager of Horizon Hospitality Investments and Horizon Hospitality (Holdings) applied to the Hong Kong stock exchange on Thursday for the listing, Cheung Kong said in a filing to the exchange.

Immediately following the completion of the proposed transaction, Cheung Kong and its telecoms-to-ports conglomerate affiliate, Hutchison Whampoa Ltd , will in aggregate hold less than 30 percent of the proposed investment trust.

Terms for a planned global offering have not be been fixed but the cash to be raised from the offer would be used to partly fund the acquisition of hotel assets from Cheung Kong and Hutchison with total gross rental area of 3.32 million square feet, it added.

Shares of both Cheung Kong and Hutchison underperformed the broader market on Thursday, ending down 1.6 percent and 1.2 percent, respectively, while the blue chip Hang Seng Index

was up 0.4 percent.

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(Reporting by Alison Leung; Editing by Mark Potter)

((alison.leung@thomsonreuters.com)(+852 2843 6369)(Reuters Messaging: alison.leung.thomsonreuters.com@reuters.net))