ARA US Hospitality Trust debuts a shade off but ends day at IPO price of US$0.88

Singapore

ARA US Hospitality Trust on Thursday made its debut on the Singapore Exchange's mainboard at US$0.875 per stapled security, just slightly below its IPO (initial public offering) price of US$0.88, but recovered to end the day at the offer price.

The opening price represents a 0.6 per cent or half a US cent discount from the IPO price. The performance comes amid a generally weaker market, with the Straits Times Index slipping 14.14 points or 0.4 per cent to 3,269.70.

ARA US Hospitality Trust is a Singapore-based stapled trust comprising ARA US Hospitality Property Trust and ARA US Hospitality Management Trust.

Including six cornerstone investors who have subscribed for about 132.4 million stapled securities, a total of 565.9 million stapled securities were issued to raise gross proceeds of US$498 million.

The IPO of some 379.8 million stapled securities comprises a public tranche of 51.1 million stapled securities, which was 1.1 times subscribed, and a placement tranche of 328.6 million stapled securities that was fully subscribed.

Separately, 8.59 million reserved stapled securities were fully allocated, the managers said.

On Thursday, UOB bought some US$5.48 million to US$5.57 million of stapled securities on the market as part of stabilising action.

Lee Jin Yong, CEO of the managers, noted that the support received from both institutional and retail investors had been encouraging, and that the trust will focus on organic growth opportunities through active asset management, and accretive investments.

John Lim, ARA CEO, added that the successful IPO is a "reflection of the market confidence in an ARA sponsored trust", underpinned by a "quality portfolio and an experienced management team".

The SGX entrant is the first pure-play US upscale select-service hospitality trust to be listed on the Singapore bourse.

Its initial portfolio, valued at some US$719.5 million, comprises 38 upscale select-service hotels totalling 4,950 rooms. They include 27 Hyatt Place hotels and 11 Hyatt House hotels, located across 21 states in the US. In addition, 36 out of the 38 properties have freehold land titles.